Questioning Economic Growth and Happiness

09/02/2011 05:26 pm ET | Updated Nov 02, 2011

What is valued is always measured and if it cannot be quantified it is sure to be ignored. It is a function of our monetary system that we measure progress according to the Gross National Production (GNP), which equals the value of a country's production. One of the unfortunate consequences of this measurement choice is that it distorts and fails to capture value creation. Counter intuitively, the collateral damage measured from traffic accidents to wars counts as a huge positive GNP value creation, while surfing the web, Skyping and sharing memories with friends and family is not shown to have any obvious value. Cleaning up a disaster, patching people back together and replacing old weapons with newer, more deadly versions creates more value than enjoying time with family and friends according to the GNP.

Only months before the crash, our top economists told us they now understood the mechanisms of our economy and with these financial measurements and tools, the economy could now be safely controlled, preventing recessions from ever happening again. How could they have been that far off? Could they have been blinded by their own flawed way of measuring these things? As a consequence of these measurements, speculation was interpreted as wealth creation and when the GNP showed the financial system had stagnated, these same financial measurements failed to capture the immense value generated from design investments in the creative new economy. Yet these are the same services that have empowered us and made our lives a little happier throughout this debacle.

To measure progress more comprehensively, the Organization for Economic Co-operation and Development (OECD) has proposed a Happiness Index. According to them, the index for well-rounded happiness consists of: Health, Life Satisfaction, Housing, Income, Jobs, Community, Education, Environment, Government, Safety and Work-Life Balance.

In the Happiness Index, income is only one of the eleven topics generating happiness and, as a consequence, the Himalayan country of Bhutan officially adopted a version of the Gross National Happiness Index as a basis for it's national policies in 2008.

So, today, how happy are we really? In 2011, the USA scored number two in wealth and number seven in overall happiness, while Australia scored number fourteen in wealth and came in as the happiest country among the OECD countries. Clearly, the pursuit of happiness consists of more than just earning and spending money and we probably all knew this intuitively even though we couldn't measure it. So how do we leverage these new measurements that are not currently captured by the GNP to redefine our goals from financial growth to progress in happiness?

Traditional thinking tells us we need to consume our way out of a depression however, a quick look into my walk-in closet reveals over one hundred shirts, twenty pair of pants, ten jackets, sixty pairs of socks and underwear and many other accessories which are clearly enough to serve me throughout my lifetime. Has all this stuff made me any happier and will buying more stuff provide any more happiness?

With unsustainable consumption habits in full view and the new happiness metrics in mind, how can we best plan and design for our future happiness and where is it to be found?