Happiness and Economic Growth: What can Bhutan teach us?

Economic thought has been monopolised by the obsession with rapid, endless economic expansion, fuelled by the modern emphasis on ‘faster and bigger’, leading to an accumulation of neglect towards issues that surround the environment as well as those distributional inequalities within countries, writes Ishtarth Katageri.

Bhutan’s Paradigm Shift

Bhutan has abandoned this train of thought, and have prioritised happiness of their people above all else by putting forward Gross National Happiness (GNH), arguing there is a disillusionment in the current model by measuring prosperity through growth and consumption. GDP, it is argued, is purely used for operational purposes, for lack of an alternative that would include environmental and social impact, rather than being used ideologically as best depicting the economic situation of a country.

GNH may have the solution, as it highlights the imperative nature of raising a population’s happiness and wellbeing, rather than merely chasing economic expansion. Surveys on areas such as physical and mental health, emotional wellbeing, financial stability and social relationships, are aggregated into an index that is grouped into nine domains, that vary from cultural and ecological diversity to psychological wellbeing and health, providing a more holistic picture of the wellbeing of a country that transcends the narrow scope of other performance indicators.

Bhutan has made it clear that it wants to prioritise equitable development, and has put in policy to substantiate their claims, and have since been working towards reducing inequality through policies such as universal primary school enrolment, as well as free access to basic health services whilst simultaneously enforcing regulation to keep the environment clean and unpolluted.

In 2022, despite the substantial increase in revenue that this would have provided for Bhutan’s economy, the government banned climbing some of the country’s largest Himalayan peaks, both due to spiritual as well environmental reasons, stating that they valued culture and a clean environment more than a ‘few cheap dollars’.

This stance is a bold one to take in a climate where countries are prepared to omit environmental impact in return for economic gain. Policies to ban plastic bags, as well as a pledge to become carbon neutral by 2030, one of the few countries that are on track to do so, have been successfully implemented. Cumulatively, these policies have meant that the general happiness in Bhutan is the highest it ever has been, with 48.1% of the population deemed deeply or extensively happy, and just 6.4% of the population deemed unhappy, with the poverty rate falling by 19% since 2010.

But borne out of these policies is often a misconception that this would lead to economic growth rendered completely forgone, and yet Bhutan’s economy has been thriving; renewable energy deals with India have been predicted to help grow the economy by 1.9%, and growth in the industry sector by 5.1% since 2022. The ideas being propagated here aren’t simply to restrict ‘traditional economic growth’, but rather to limit the specific industries in which it occurs, with Bhutan cutting on meat consumption and air travel, with a potential corollary being that GDP and GNH could both be equally relevant, each simply providing an insight into different aspects of the economy. It is imperative that this is in conjunction with governments across the world, for this cannot occur without full support as it would create a ‘GNH bubble’, and work towards replacing this incessant treadmill of production with equitable welfare improvements for their citizens by following Bhutan’s example.

Perhaps, then, it is that happiness and economic growth can occur cohesively rather than one in the absence of the other.