June 23, 2018

The story from Denmark: happiness trumps GDP

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The happiest countries in the world are mainly in Northern Europe, with Denmark coming out top. The highest scores for happiness did not come from income alone, but from political freedom and an absence of corruption.

Individuals also valued job security and good mental and physical health.

If that is true, why do economists insist on using GDP as the measure for national wellbeing?

The New Economic Foundation provided a template for an alternative measure of national wellbeing:

  1. Good jobs
  2. Well-being
  3. Environment
  4. Fairness
  5. Health

So why don’t economists and politicians take action on this? Maybe the answer is that despite its admitted drawbacks, GDP is a relatively easy measure to calculate, compared to a possibly complex index based on the above five parameters.

As a footnote, not everyone agrees about happiness in Denmark. Newspaper editor Anne Knudsen thinks Danes continue to respond positively to happiness surveys because: “In Denmark it is shameful to be unhappy.”

Gerry Reilly, Senior Teaching Fellow About Gerry Reilly, Senior Teaching Fellow

Senior Teaching Fellow, delivers the on-campus Economics seminars and is part of the Strategic Planning teaching team.