a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
Many people have different perspectives on the term 'happiness' and in today's context, many are very realistic in terms of their goals, where money is the motivation. Materialism has also sunk into our culture, where happiness is accounted for by material gains. Perhaps the pursuit of happiness would not jeopardise the economic growth of Singapore. Singapore relies largely on trade and AD is likely to rise with increase in consumption of goods and services, both domestic and imported. In this case, the standard of living is likely to rise.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
The conventional method of GDP requires much less hassle as compared to GNH. Certain areas are also not quantifiable under GNH and would probably not be an accurate reflection of the country's growth. Commercial transactions is still a more practical indicator of growth, and data of some indicators of GNH (intangible factors)would take a much longer time to compute.
However GNH has its good points (e.g. resolve the shortcomings of GDP)and continual studies on the use of GNH as the key indicator of economic growth could possibly uncover an easier standard to follow for use in the long run.
a) By pursuing happiness, it can be assumed that this will lead to less economic growth. Most people in Singapore, or even in the world do not necessarily like their jobs. The reason why they continue working is not because they are happy, but simply because of the monetary gains. However, with the pursuit of happiness, it is inevitable that people will tend to do things they enjoy more, and with majority of the working population just working for the sake of their monthly pay (Haha I know it's a gross generalisation but let's just take it as an assumption), quantity and quality of resources may decrease as a result of reduced productivity. There will be no rightward shift in the LRAS for potential economic growth which is essential in economic growth. LRAS has to shift together with the AD, otherwise there will be either inflation or excess capacity which will not be beneficial to Singapore. Steph, we have to consider issues of potential growth as well right? correct me if I'm wrong :) b)GNH is a very subjective tool for measurement purposes. I agree with steph that "certain areas are also not quantifiable under GNH and probably not be an accurate reflection of the country's growth". Having real figures to deal with makes caluculating growth much easier :)
a) Like what steph and germ said, people in Singapore are practical and choose their work only because of the monetary gains, not happiness. And it is also due to the fact that the vast majority of the people and economies around the world adopt such practical and materialistic way of life that any country and its people who chooses otherwise will simply lose out, just as reflected in Bhutan which is quite remote and not as economically developed and prosperous as it can be.
Hence it is very likely and only possible if Singapore, a small country lacking natural resources, a price-taker, takes GDP as its main economic indicator rather than GNH. Like what steph said, Singapore is highly dependent on trade, FDI, and without GDP to calculate the corresponding values, current and capital acc, we will not be able to keep track of the current trends and this might lead to inflation or excess capacity, as germaine explained, if not handled properly.
b) As said in part a), this way of using GDP has been around for quite some time, and given that it is used globally, it is only common sensical to adopt this method too instead of GNH as countries can then compare with countries in terms of GDP and even the values used to calculate for GDP, which gives rise to healthy competition amongst countries to raise GDP per capita so that average SOL can be found and used as a basis of comparison to improve SOL.
However, as steph and germaine has mentioned, GDP has its shortcomings, and some of it happens to be reflected in the plus points of GNH, such as factoring in the unpriced ecosystem service as mentioned in the article. Hence studying GNH's benefits is good as relevant benefits can be sieved, modified, and fitted into our current day economy so that GDP and GNH are coupled to possibly bring about higher SOL as compared to simply GDP.
a)As mentioned by steph, germ and kaymond, Singaporeans are materialistic. Hence, by pursuing happiness, it may not necessarily means a decline in economic growth, as most Singaporeans find joy in shopping. This will means an increase in AD, as consumption increases, leading to a shift in AD, which is an actual growth. This can lead to an increase in trade, as Singapore depend mainly on imports for goods and services. But if import expenditure exceeds export revenue, this might lead to a decrease in AD.
However, as mentioned by germ, if we were to focus mainly on happiness, it may not lead to potential growth as people do not find joy in renewing their skills, as they deem it as troublesome and tiring. This will lead to decreased productivity and may lead to a backward shift of LRAS.
b)GNH is not chosen as it is hard to quantify the well-being of people. Moreover, it is not feasible to find out the well-being of every citizen in the country, as it will take very long to collate the results. In addition, an increase in GNH may not necessarily mean an economic growth. In this case, it will be better to use GDP, which takes into account most economic transactions.
GNH is not used for resource allocation, as different people want different things. It is hard for the goverment to allocate resources efficiently to people based on GNH, as it is hard to please everyone. Those who do not benefit from the allocation of resources may be unsastified with the government. This could lead to a decrease in productivity, as these people go on strike.
Despite GDP having its limitations, this can be overcomed by taking into account the population size of the country and finding out the real GDP instead of nominal GDP. However, this does not mean that GNH is not useful. It can be incorporated into other indicators of Standard of Living. For example, for Human Development Index, one more category of happiness of citizen could be added.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
The pursuit of happiness may or may not lead to a sacrifice of economic growth in Singapore. As Singapore becomes wealthier (marked by our high GDP), Singaporeans are more materialistic (as mentioned by steph) and to pursue happiness (in terms of satisfaction for being able to consume more goods/ better goods), they may actually work harder (be more productive) to earn more income and thus, this may lead to economic growth.
However, as mentioned by germ and kwan wei, some people may actually have lesser productivity or even be unemployed (due to lack of interest in jobs or low productivity) in their pursuit of happiness, as they may not enjoy their jobs. This will lead to decreased productivity and may lead to a leftward shift of the LRAS, and thus, full employment level of output decreases.
We can also view the pursuit of happiness in terms of consumption by Singaporeans. Materialistic singaporeans will spend more and as Kwan wei mentioned, this means an increase in AD, (due to increase in consumption), leading to a shift in AD, which is an actual growth.
However, there may be the problem of Singaporeans overspending on imports. If import expenditure exceeds export revenue, our current account may decrease in value or even be in deficit.
Thus, whether the pursuit of happiness will lead to a sacrifice in economic growth depends on whether the "happiness" is derived from working or working harder and thus leading to increased producitvity and thus potential growth, and if happiness is derived from Singaporeans' expenditure on imports or domestic goods.
b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
GNH is not used in other countries as some factors such as "volunteer work, unpaid domestic work, and unpriced ecosystem services" are hard to quantify or to put a monetary value to these factors. As steph mentioned, GNP or GDP are still more practical indicators of growth, as it is easier to compute and quantify. Kaymond also mentioned that since Singapore is highly dependent on trade, FDI, we will need GDP to calculate the corresponding values, current and capital account, or else we will not be able to keep track of the current trends and this is problematic.
As mentioned in the article in Miss Lee's previous post, "GNH was developed in an attempt to define an indicator that measures quality of life or social progress in more holistic and psychological terms than gross national product or GDP. As a chief economic indicator, GDP has numerous flaws long known to economists." As we've learnt, GDP alone is not accurate. GDP calculated must be real and per capita, to equalise the effect of inflation and population size. Even so, GDP has limitations such as not being able to reflect income distribution within a country (rural vs city areas) and also failure to calculate non-market or underground transactions and value of externalities. This is where GNH is useful,as it takes into consideration "non-market benefits (such as volunteer work, unpaid domestic work, and unpriced ecosystem services) in arriving at an indicator of well-being", and thus people are still studying GNH, hoping to perfect it such that it also takes into consideration factors such as income per capita (which affects consumption and hence standard of living.
[b]a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?[/b]
I concur with Steph’s point that the idea of happiness varies from person to person, but I think that the concept of GNH as an indicator of wellbeing does not include the notion of materialism (what many contributors have suggested) from the government’s point of view. As quoted from the article, GNH is “an indicator that measures quality of life or social progress in more holistic and psychological terms”. Happiness in this context does not have the same literal meaning as it has to us in everyday terms. I think that the factors used in quantifying GNH would lean towards the side of non-material welfare of the citizens, like social and political wellness. For example, even if a country has a high GDP, if it fails in the aspect of providing basic protection for their citizens against crime, its GNH would reflect this.
Back to the issue at hand, I don’t think that the pursuit of happiness and economic growth are necessarily mutually exclusive goals. Many aspects of non-material wellbeing can translate into economic growth for the country. If a country has a democratic political system (political wellness), the fair election of talented leaders for the country will serve its people well by steering the country’s economic growth positively. If the country has a positive workplace culture, a goal that is admittedly complicated and not easily achieved, employees will likely be more productive as well, achieving happiness and contributing to better economic growth for the country simultaneously.
However, all these changes will take a long time to be effected, and requires a fair bit of investment – overhauling the system, implementing policies, as well as garnering the citizens’ affirmation (a arduous task as it is unlikely that many citizens will be able to comprehend the need for such expenditure nor foresee the long-term benefits). In the long run, I am of the opinion that the net benefit will be positive for the country, if they are willing to take the risk from the start
[b]b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?[/b]
Due to varying expectations of the people in different countries (where factors like religion and culture play a part), GNH can be grossly misrepresented since it is a very subjective index. Case in point: people living in flood-prone areas in Indonesia might consider one flood a year an exceptionally good year, and rate their wellbeing highly; while Singaporeans would consider a flash flood for a few hours nothing short of a travesty on their wellbeing. From a country like Singapore’s point of view, whose citizens are notoriously hard to please, it is logical that the government is reluctant to use the GNH, as it would magnify the country’s flaws to the rest of the world, affecting its reputation (and even its economic growth as investors may see Singapore more poorly).
Like what everyone said above, it is not pragmatic to use GNH since GDP is more tangible indicator and can be used across the board to compare a country’s economic progress with others. Moreover, using GNH to shape economic policies can be disastrous. If a country decides to spend extravagantly on campaigns to reduce discrimination in a country (increase social wellness), and as a result, GDP declines, there will be no more money to fund any GNH goals in the future.
Nonetheless, countries still wish to take GNH into consideration, as it would be myopic and extremely narrow-minded to focus solely on economic growth. GNH is important, but less than GDP in formulating economic policies for countries. As a well said quote puts it, “Money cannot buy happiness, but neither can poverty.”
a) The idea mentioned by many that happiness is accounted for by material gains is more applicable to less developed countries and not so for ac affluent country like Singapore. In Maslow’s Hierarchy of Needs, motivated by unsatisfied needs, once an individual has satisfied his basal requirements, he will look to attain more, in terms of non-material achievement. Thus money, or spending power, is only significantly correlated to happiness mainly in poorer countries, where not all basic needs have been met yet.
While many covet for richness and material goods, achieving these only give momentary joy when they feel that they are better off than others. This sense of exclusivity, however, runs out fast when they compare with others who are richer or even when they grow accustomed to what they have and look instead to what others have that they do not. Thus, contentment sought through material wants, lasts much more shortly than that found through serious relationships.
Therefore, in the pursuit of happiness, the focus should be on emotional relationships and not consumerism, which will not affect AD. The government has recognized this point and has taken action, implementing the 5day work week for civil servants. It may, however, like Germaine said, hinder the rightward shift of the LRAS and hence potential economic growth if leisure and bonding time is over-emphasized. This is unlikely, though, the government recognizes the need for Singapore, which lacks other sources of income, to maintain a productive and competitive human resource. Hence, work days are not likely to shorten anymore, but this does not deny us of the pursuit of happiness altogether as it is the quality time and not quantitative time spent in relationships that matter.
Moreover, similar desiree’s point, happiness and economic performance are not mutually exclusive. Due to man’s innate desire to excel relative to others (The Economist 2006/2007), most people derive happiness from performing well relative to others. Hence, many aim to do well in work and when they achieve so, feel happier. This improves the efficiency of firms as workers vie to perform better than each other and with a conducive (but not overly stressful) work environment and culture, will also lead to more economic growth.
b) While no other country chooses the GNH for their policies per say, countries are starting to include citizens’ happiness and well-being levels into their policy considerations. Take for e.g. the French government’s recent intent to include happiness as a reflection of economic performance and the British Conservative Party’s leader’s introduction of “general well-being” (GWB) instead of GDP. The increasing importance of happiness in policies stems from the recognition that happiness levels of a country’s population does play a role in economic performance. Layard has argued that around one million people receiving incapacity benefits from depression and stress which made them unfit for work pose a very big social problem.
Yet it is still not conventional to take GNH into account yet as there are still many limitations. Unlike GDP, happiness levels are very subjective and vary largely between countries due to the different societies’ expectations and demands, thus comparisons between countries, required for many policies, will have severe limitations. Within the country itself, it is also difficult if not impossible to measure accurately the impacts policies have on the country’s general happiness level. Firstly as many can be myopic, and have unpractical demands/views, which will not be good for the economy in the long run, and giving in just to raise happiness levels is just not feasible. For e.g. transferring much more resources from capital goods to consumer goods will definitely cause a leap in happiness level for a period of time, which will make to economy look very successful based on GNH. However, the PPC of the country will not be able to expand in the future and its firms and labour resource may not be able to be viable in the global market, which will be very detrimental to the citizens’ happiness then.
Secondly, obtaining the measure for people’s general happiness level is questionable, especially in countries with large populations. Self-reporting will be the most cost and time-effective way, but poses a problem of credibility. Happiness is volatile and tends to fluctuate from period to period affects people’s happiness measure. Besides that, not all respondents may be mature enough to accurately assess their emotional state. For instance, drug addicts would, by their own estimate, measure happy all the time. It is also impossible to record the happiness level of everyone, especially in countries with people staying in places that are hard to access.
Therefore, many countries’ governments do not base their economic outlook solely on GNH or any other measure of happiness, as effects will be disastrous, but realise the need to keep it at acceptable levels and to integrate it into policies where it can be mutually advantageous for the economy and happiness level.
PS pardon me for the quote etc, cuz i did a research proj on a similar topic before
Economic growth is determined by investments, domestic consumption, and export and import markets, government policies that will either result in the AD shifting to the right or the LRAS to shift to the right (potential growth). A shift in AD will be the one that determines whether economic growth is present.
In Singapore, there co-exist different societies-be it in terms of religion or the income classes of the population- that will have different ways of pursuing happiness.
Religious people often seek to attain enlightenment and engage in religious praying activities to do so (I’m just making a point, this may not be true for all religions / religious people; it’s a generalization from the impression that the monks meditate their way to nirvana). These activities do not bring about economic growth in terms of its contribution to the country directly through spending (if we discount the purchase of joss sticks and etc relative to higher priced luxury goods). Indirectly, they may discourage foreign investments as investors tend to shy away from religious intensive countries due to speculated racial riots or racial tension & instability, especially in a racially diverse country like Singapore.
For the income classes of population, pursuing happiness may come in the form of consumerism (& materialism), or able to get a job that they are highly passionate for. Consumerism will lead to increased domestic consumption, especially foreign luxury goods and more spending domestically.
I won’t be expecting a certain result because whether or not Singapore will experience economic growth in this manner is dependent on the extent these activities are carried out. Religious people may still devote time to their faith, but if they still work, economic growth can actually increase because happier people generally means in increase in work productivity (quality of labour & quantity if religious people do still work).
b.)
As mentioned by Desiree, happiness may not necessarily be attained through increased consumption of material goods & services but through social and religious methods as well.
This makes GNH difficult to set a common benchmark as everyone has different perceptions or ideals of happiness. GDP (real or nominal) is much easier to utilize since it is standardized, despite accounting difficulty in summing up the values of factors, assigning values, excluding and including which ones.
However, GNH can still be studied, and I would say, as a supplementary method to discuss the standard of living across people of similar occupations or in the same industry, or under a standardized category.
Should GNH be used for resource allocation, it will bring about market inefficiency, possibly leading to market failure; this requires government intervention and then again may lead to government failure. This is because in economics we study it to allocate scarce resources in the best way possible to minimize opportunity costs and to maximize welfare to meet unlimited human wants.
We do not have enough resources to allocate through GNH, and not everybody can be satisfied through such a policy. This is especially through in larger countries. Bhutan is a small nation so its still relatively easier to work with such a policy
a) The variation in perspectives on the term “happiness” has led to some degree of uncertainty to the answer of this question. If happiness were to be defined as the non-material achievement, which is likely the case in more affluent countries like Singapore, the pursuit of happiness (in terms of leisure time, clean environment, religious faith and harmonious community relationship etc. ) would less likely contribute to the economic growth in Singapore by shifting the AD and LRAS curve to the right. However, given a happier mindset/status, Singaporeans are likely to be more productive at work, hence, compensate for any leftward shift of AS caused by shorter working hour, greener but less efficient production method etc. Therefore, from the supply side, although the pursuit of happiness does not benefit the economic growth, neither does it mean a sacrifice. On the other hand, if happiness is correlated with richness and materialism, the pursuit of happiness would mean greater purchasing power, greater monetary gain etc. then the pursuit of happiness amounts to increased consumption and therefore shifts the AD curve to the right. Such accretion in consumption and personal investments would mean a blessing for Singapore economy. b) Although GNH takes into account the happiness level, a significant part of the society’s non-material well-being, it is too narrow a measurement to indicate the country economic growth or provide a full picture for resource allocation. The problems with GNH includes -the difficulty in measurement due to the subjective nature of happiness -inability to convert to a universal standard for comparison between the countries -transfer resources to consumers’ goods increases GNH but refrain potential growth if too little resources are allocated for capital goods A more realistic measure would be real GDP per capita, which is universal and easier in terms of data collection. However, real GDP per capita has flaws and limitations as it does not consider income distribution and composition. If further studies on the income distribution, economy structure of the society are in place, together with more holistic measures such as HDI and MEW, the government is likely to make a better decision on policies for economic growth and resource allocation. ---chenglu
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
Happiness is rather subjective to different individuals but generally, it should mean a higher standard of both material and non-material welfare. However, the article seems to focus more on the 'pursuit of happiness' through non-material aspects which could be measured by GNH. Even though GDP is flawed because it is unable to take into account what GNH can, it is probably not practical to use the concept of GNH to shape economic policies for economic growth. I think the GNH should be used as a complement to GDP instead of using GNH as a sole indicator of standard of living.
Using GNH would place the objective of improving non-material welfare at higher priority which might improve the standard of living of citizens in the short run but it will not be sustainable in the long run. Too much expenditure on non-material welfare like healthcare would lead to a fall in GDP as there is opportunity cost since less funds would then be available for generating growth in the economy. Spending on aspects such as security against crime would not generate income. In a small country like Singapore, this would affect us greatly as there is opportunity cost incurred. For example, Outward FDI might be reduced with less funds allocated for investment which would affect Singapore's economy greatly since we depend much on trade and FDI to boost our economy.
However, improving material welfare could also stimulate economic growth. For example, a policy to improve healthcare services and infrastructure could result in inward FDI increasing and private consumption of healthcare services could also increase, leading to economic growth.
In conclusion, I think that the pursuit of happiness might not necessarily mean that economic growth has to be sacrificed. Improving material and non-material welfare should be on a balanced scale to ensure sustainability and continuous improvements in both aspects.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
I think that this could be because the GNH would provide a holistic account of the general well-being of the people. This could be a bad point since it would also magnify the inadequacies of the government. In many countries, developing and ensuring continuous economic growth is the main objective because the improvement of non-material welfare would take a significantly longer time period to accomplish and also requires funding from a growing economy. In developing countries, using GNH would be impractical since they do not have the means to ensure sustained efforts in increasing the standard of living the people over a long period of time for there to be significant improvement. In using GNH, too much resources would be allocated to developing non-material welfare and this would have devastating impacts on the economy.
It is also difficult to ensure that the GNH is an accurate indicator since happiness is very subjective. Hence, it would be very hard to conclude if it is reliable. Using unreliable data to create policies would be disastrous. For example, in the case of worsening pollution, an environmentally-conscious person might be very unhappy with the situation as opposed to a person who is not environmentally friendly being happy with the current levels of pollution.
However, GNH could be beneficial in allowing the government to have a clearer picture of the social and psychological well-being of the citizens so as to craft possible policies in the future when observing a decreasing level of GNH. Increased social and psychological well-being of the citizens would lead to peace and cohesiveness of the society which could attract investment compared to a country caught in political unrest.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
Like what Cheng Lu said, the definition of happiness is subjective here. Some Singaporeans may already be weary of hectic working lifestyles even though they are able to earn quite decent incomes from their work. To this group of people, happiness may mean shorter working hours and a more leisurely lifestyle. In this context, this particular pursuit of happiness would impair economic growth as reduced working hours would mean reduced production.
If happiness were to mean more materialistic pursuits, Singaporeans would try to work harder in order to earn more money. Production of goods would increase, causing a shift in LRAS to the right and increase potential growth. AD would shift to the right as well if people prefer to spend more to get ‘happiness’. Short term supply would increase.
It is possible to have both happiness and economic growth as well. Shorter working hours might not necessarily mean reduced production as workers can learn to be more productive and produce the same amount of goods in a shorter time. The Singapore government has been putting emphasise on productivity and improving worker’s skills and employability so as to achieve this.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
Most countries use GDP for this purpose mainly because it is easier to calculate tangible values. Also, it is faster and the values are non-arguable to a large extent. GNH is highly subjective and it would be difficult to decide on a fixed monetary value for it. Different people might have different views on what a good quality life entails. Taking the example of pollution, some may view cleaning up as an economic cost, but others may view it as welfare to society and is hence a benefit.
GNH runs a high risk of being not representative. The government may not be able to gather survey from everybody on their well-being, and furthermore such data can easily be manipulated by the government.
People standard for happiness in different countries may vary as well, and hence the GNH may not be effective in comparing across countries.
However, there is no need to give up on GNH completely as it may still provide governments an insight onto the psychological well-being of the people.
a) As can be seen, most of us question the exact definition of "happiness" here in the context of Gross National Happiness(GNH). According to the article, GNH "assesses changes in the social and psychological well-being of populations". This means that we're looking more into the aspect of the general well-being of people and thus i believe that it is the non-material aspect we're talking about here.
If that is the case, in my opinion, the emphasis on the happiness level of Singaporeans will mean a decrement when measuring the economic growth in Singapore. This is because as all of us are vividly aware of, the fast-paced life in Singapore, which involve most people working very, or even excessively hard is the main driving force for the prosperous economic well-being of our country. As such, it is understandable the opportunity cost of the loss of leisure time is incurred for many Singaporeans, and this results in a reduction of their happiness level as perhaps, they are unable to spend enough quality time pursuing their interests or with family and friends. True enough, it is commonly known that the stress level in Singapore due to the hectic lifestyle and intense competition in striving for excellence is causing many Singaporeans to feel pessimistic towards the issue of happiness in living here. As such, if we were to use base our economic growth on GNH, it will lead to a definite drop in Singapore's ranking in terms of economic well-being.
However, i am not claiming that the pursuit of happiness will directly impact or slow down our economic growth in definite terms, but rather, i feel that the measurement of economic growth based on GNH will lead to a decrease in the value of Singapore's economic growth. In fact, the pursuit of happiness can actually be complementary to economic growth if in a country, people are generally happy with their everyday life while they are also busy working and striving to improve the country's economic performance.
b) Like what everyone has mentioned, unlike GDP, there are calculation problems involved when using GNP as an indicator of economic growth, when it is supposed to be a measurement method in itself. Firstly, it is very difficult to give a definite value for a certain level of happiness. Secondly, it is even more difficult to find out the actual happiness level in a country. This is especially so when the country consists of developed and developing regions, because the definition of happiness is subjective to people in the different areas (as everyone has mentioned :), and there will also exist data collection problems in the developing regions.
However, since all of us know that GDP itself has several flaws no matter how widely it is being used as an economic growth indicator, GNP can therefore be used as a complementary indicator to GDP. GNP mainly measures the non-material aspect of economic well-being, and thus when both GDP and GNP are used together, it will give a very well-rounded measurement of a country's economic growth, in terms of all 3 aspects of economical, social and psychological well-being.
a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
As questioned by everybody before me, the idea of what exactly constitutes happiness is very ambiguous. The definition of happiness can differ from person to person, why it can even be different for the same person in two different time frames. Broadly, it can be broken down into two areas – happiness arising from material and non-material well-being.
Economic growth is currently measured in terms of GDP which is the material well-being of a citizen. As output grows and people earn more, the GDP would rise and consequently the economy would grow. In such a situation, people would be happier as well since their income rises. This can be translated to an increase in the material well-being of a citizen. It is assumed to a large extent that people generally want to earn higher incomes and that they strive to achieve that. With this increased income, people can buy and consume more goods and this would make them happy. Thus people are constantly trying to increase their expenditure budget (which requires them to work harder) which results in economic growth. The pursuit of material happiness can be directly quantified into economic growth. However, this type of happiness is only common in developing countries. With Singapore being affluent, most people are not very worried about material gains since they can already afford it.
This brings me to the next type of happiness which is caused by the non-material well being. As mentioned by Yee Ting, the article itself seems to imply that non-material happiness is more important. As shown in the article, non-material happiness is harder to calculate as some areas are hard to quantify. Thus using the GNH to measure a country’s quality of social life may be hard and as correctly pointed out by Yee Ting, using the GNH would definitely result in Singapore being in a lower position owing to the hectic lifestyle of Singaporeans. However, this does not mean that Singapore will not face economic growth if it were to follow such non-material happiness. Like Desiree said, this non-material happiness such as the “positive workplace culture” can encourage people to work harder making them more productive resulting in economic growth. Thus pursuit of this type of happiness can also result in economic growth.
However, this can only be achieved in the long run and would take a fair bit of time to implement across the board. Thus, risks will have to be taken by the government and ensuring proper pursuit will result in greater economic growth. Essentially, the pursuit of happiness and economic growth can be related positively and improvements to one would result in the rise of the other.
b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
GNH is a very subjective tool in measuring economic growth as what pleases a certain group of people may not please another group. This point is exemplified in Desiree’s point about happiness levels differing between Indonesia and Singapore. Thus using GNH would result in very different policies being made between countries and compatibility would be hard. This would be disastrous as trade between countries could be hampered if a compromise cannot be reached. Furthermore, GNH includes many factors that are hard to quantify such as leisure time. It is also almost impossible to determine the happiness level of a country. Thus, GNH would become less and less accurate as more of these factors piled in. Hence GNH is not a very reliable method of formulating policies as compared GDP.
GDP is calculated in a specific manner and it is done in this very manner for every country thus ensuring uniformity and allowing for better resource allocation around the world. GDP is more tangible as it can be much more easily quantified as compared to GNH. Policies formulated from GDP tend to be more consistent as compared to those from GNH as happiness as change definition from era to era. However, it is still important to study GNH as it gives the government a rough idea of whether its people are happy or not. It can be used as a measure of the standard of living in a country.
As mentioned by Yee Ting, it is not wise of us to look at each measurement on its own. While one tells us about the economic performance of a country, the other related measurement tells us about the happiness level in a country. It is therefore necessary for us to examine both in unison to be able to view a holistic picture of the situation at hand.
This question seems to stem from the fact that economic growth has not seen a proportional correlation with happiness in the past years. It goes to show that while material well-being has improved, the social aspects of well being has not been addressed very well by classical economic theory. This problem, i feel, has arisen because political leaders from many countries are too driven towards the classical notions of economic growth to seriously consider the impacts on society's well-being. However,the study of behavioral economics also implies that both pursuing happiness and economic growth can increase proportionally given the right policy implementations. The case for the building of SIngapore's casino is an example of how economic growth and happiness(quality of life, entertainment opportunities in this area)go hand in hand, although this applies only to certain people. The economic reason for building a casino resort was that it provided opportunities to attract investors, improve Singapore's tourism industry and increase employment for locals. At the same time, social welfare groups like churches charged back, rebutting that this would promote social ills e.g. addiction and money squandering.Since it is natural for dissent to occur between people , happiness can never be experienced by all. As such, to cater to the 'happiness'of the churches would mean sacrificing growth opportunities for tourism and FDI. However, whilst this may be true, such a case is limited in scope. Case in point: The development of Punggol residential areas, such as a site used for mixed commercial and private residential development. Not only does this benefit residents in Punggol by vastly improving their quality of life, this project can potentially lead to greater business prospects for Singapore. (New industrial sites, business centres etc) Not only are Singaporean's 'happiness' levels increased, economic growth can be expected to rise as well. Hence, careful consideration is pertinent when planning for economic growth and ensuring it isn't fulfilled at the expense of society's well-being, at least in the long run. My conclusion is that both growth and happiness can be achieved without necessarily forgoing the other element.
b) It seems everyone more or less feel that subjectivity is a crucial limitation for such an index (and i agree too. I guess my comments simply serve to help reiterate the truth. The obvious reason for not choosing GNH is that the value systems differ in many countries. Just to supply more examples: Guatemala is ranked one of the top few happiest countries but is frequently ravished by hurricanes and earthquakes. Some say they managed to stay happy because of their natural supply of bananas and coffee. Who knows? Austria is an extremely green country with more than 70% of its energy being renewable(good living quality). Also, it appears to value democracy and freedom of views, with 16yrs old being the eligible voting age.Yet countries which are less democratic e.g Denmark still manage to be one of the happiest countries. (Seems like not everyone values freedom of expression as much as others.) In Singapore, the furore over the foreign worker domitory saga in Serangoon clearly reflects our society's cultural sensitivities which might not be present in a country where social distress is a norm. As such the degree of society's values need to be considered before using any index and the cost and benefits of implementing policies based on such index must be weighed out. This is not to say that such index should be ignored totally as they do provide some useful insights and truths for leaders to maintain society's welfare, e.g where religiousity/spiritual well-being is considered.
a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
Personally I felt that even as people in Singapore are materialistic. pursuit of happiness will still indirectly cause a sacrifice of economic growth. A few weeks ago, there is this article in Straits Times talking about the happiness level of people living in Singapore. Results of the survey conducted have shown that people who are from the "lower class" earning lesser are the most happy lot. Whereas, those from the upper class, working in big firms actually felt more stressful and don't feel as happy. This group of people actually spent most of their time and effort at work, thereby contributing to Singapore's economic growth. However, the opportunity cost here is their leisure time, which is why they don't feel as happy. On the other hand, those who have more leisure time to themselves felt happier. Therefore, I believe that pursuit of happiness will more or less affect the economic growth.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
GNH is a measurement which takes in a lot of aspects GDP doesn't and solve the shortcomings of it. However, it is very difficult to collect the data needed for GNH. One example will be the happiness level of people which is so subjective and people feel happy and contented towards different things(Like what Ranon mentioned). So how are we going to measure happiness level since surveying the people will result in inaccurate results? In this case, it might be wiser to take GDP as the tool for measurement because GNH, on the surface might solve all the problems GDP might give, but in the end, might be more inaccurate due to the delay in data collection and how subjective the requirements are.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
Financial statuses are but one of many factors which contributes to happiness. How much this financial factor weighs in on the happiness scale varies from person to person. As what everyone else have already mentioned, the formula of happiness cannot be deduced. To some money may be their greatest source of happiness while others regard money secondary to other aspects of life. However, for Singaporeans who are mostly rather materialistic, we can assume that generally Singaporeans would want more than just our basic needs met and that monetary gains ranks fairly high on our happiness index.
In my opinion, Singaporeans in general are sacrificing happiness for higher economic growth despite factoring in the importance we place on money. Although having more money does provide us more happiness, we seem to be giving up too much of other aspects of happiness for it. Singapore's GDP may be increasing, but so are the stress level of Singaporeans. We have lesser and lesser time for ourselves and we try to make up for it with our increased earnings but sometimes it is not a fair trade off. For example, mothers now may place more emphasis on their careers and try to make up for it by hiring maids to take care of their children. This will eventually result in a distant relationship between mother and child. The value of relationships would naturally be considered much higher than the slight increment in income. Furthermore, Singapore has become so commercialised that we are led to think that materialism brings us happiness. These material things only provide us temporary satisfaction and the pursue of materialism will drag us into a vicious cycle. There will always be better products on sale eventually, causing us to derive less happiness with our purchase. If all the factors leading to economic growth were to remain the same, then in order for Singaporeans to pursue happiness it will require a sacrifice of economic growth.
Nonetheless, in order for Singapore to pursue greater levels of happiness, economic growth need not be sacrificed. This can be done so by increasing economic growth via methods which would not infringe into the people's happiness. One example would be to reduce working hours but maintaining output level by means such as improving the quality of labour or using more advanced technology. The possibility of these occurring are high for Singapore as our education standards are improving, which translates to a more efficient labour force in future, and we are a developed country with considerable involvement in the technological field. Additionally, when employees are happier, they will become more productive. Of course we must not forgo economic growth altogether in the name of happiness as even though money may not be able to buy happiness, it still matters, especially to us Singaporeans.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
Though most agree that GNH is by far a better indicator then GDP, it is ironic that everyone still continues to use GDP as an indicator for the standard of living. This is probably because the GNH indicator is ideal but unrealistic. One of the main problem would be allocating a suitable value to the intangible. Whatever the value may be, people are bound to disagree with it since the value people associate with the various aspect differs. Furthermore, the people may also argue with the aspects factored in into counting GNH as they may feel it has left out some other important measures or that some measures are being overstated. GDP, on the other hand, has little room for arguments as compared to GNH since it involves calculating tangible things with fixed values attached to them and therefore is often preferred.
Another deterrence to using GNH may be the difficulty in convincing other countries to use the same indicator. Such indicators will only serve its function if comparisons can be made as a single value along will be meaningless. Developing countries especially will object to it as data collection is already a problem for them and calculating GNH which requires even more data collection will result in a heavier burden for them. Others may feel that GNH is still not a suitable indicator. The ones who may be primarily responsible for the rejection of the GNH may actually be the developed countries. As what Ranon had highlighted, “Guatemala is ranked one of the top few happiest countries but is frequently ravished by hurricanes and earthquakes”. It suggests that the happier countries are actually the poorer nations. Perhaps these developed countries, who undoubtedly have more say in international issues, reject the usage of GNH as they are afraid of being deemed as having a lower standard of living and as a result will no longer be considered as developed.
The reason countries continue to study the GNH may be perhaps they are all in search for a perfect indicator which is both ideal and realistic.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteMany people have different perspectives on the term 'happiness' and in today's context, many are very realistic in terms of their goals, where money is the motivation. Materialism has also sunk into our culture, where happiness is accounted for by material gains. Perhaps the pursuit of happiness would not jeopardise the economic growth of Singapore. Singapore relies largely on trade and AD is likely to rise with increase in consumption of goods and services, both domestic and imported. In this case, the standard of living is likely to rise.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
The conventional method of GDP requires much less hassle as compared to GNH. Certain areas are also not quantifiable under GNH and would probably not be an accurate reflection of the country's growth. Commercial transactions is still a more practical indicator of growth, and data of some indicators of GNH (intangible factors)would take a much longer time to compute.
However GNH has its good points (e.g. resolve the shortcomings of GDP)and continual studies on the use of GNH as the key indicator of economic growth could possibly uncover an easier standard to follow for use in the long run.
- Steph
a) By pursuing happiness, it can be assumed that this will lead to less economic growth. Most people in Singapore, or even in the world do not necessarily like their jobs. The reason why they continue working is not because they are happy, but simply because of the monetary gains. However, with the pursuit of happiness, it is inevitable that people will tend to do things they enjoy more, and with majority of the working population just working for the sake of their monthly pay (Haha I know it's a gross generalisation but let's just take it as an assumption), quantity and quality of resources may decrease as a result of reduced productivity. There will be no rightward shift in the LRAS for potential economic growth which is essential in economic growth. LRAS has to shift together with the AD, otherwise there will be either inflation or excess capacity which will not be beneficial to Singapore.
ReplyDeleteSteph, we have to consider issues of potential growth as well right? correct me if I'm wrong :)
b)GNH is a very subjective tool for measurement purposes. I agree with steph that "certain areas are also not quantifiable under GNH and probably not be an accurate reflection of the country's growth". Having real figures to deal with makes caluculating growth much easier :)
-Germ
a) Like what steph and germ said, people in Singapore are practical and choose their work only because of the monetary gains, not happiness. And it is also due to the fact that the vast majority of the people and economies around the world adopt such practical and materialistic way of life that any country and its people who chooses otherwise will simply lose out, just as reflected in Bhutan which is quite remote and not as economically developed and prosperous as it can be.
ReplyDeleteHence it is very likely and only possible if Singapore, a small country lacking natural resources, a price-taker, takes GDP as its main economic indicator rather than GNH. Like what steph said, Singapore is highly dependent on trade, FDI, and without GDP to calculate the corresponding values, current and capital acc, we will not be able to keep track of the current trends and this might lead to inflation or excess capacity, as germaine explained, if not handled properly.
b) As said in part a), this way of using GDP has been around for quite some time, and given that it is used globally, it is only common sensical to adopt this method too instead of GNH as countries can then compare with countries in terms of GDP and even the values used to calculate for GDP, which gives rise to healthy competition amongst countries to raise GDP per capita so that average SOL can be found and used as a basis of comparison to improve SOL.
However, as steph and germaine has mentioned, GDP has its shortcomings, and some of it happens to be reflected in the plus points of GNH, such as factoring in the unpriced ecosystem service as mentioned in the article. Hence studying GNH's benefits is good as relevant benefits can be sieved, modified, and fitted into our current day economy so that GDP and GNH are coupled to possibly bring about higher SOL as compared to simply GDP.
-Kaymond
a)As mentioned by steph, germ and kaymond, Singaporeans are materialistic. Hence, by pursuing happiness, it may not necessarily means a decline in economic growth, as most Singaporeans find joy in shopping. This will means an increase in AD, as consumption increases, leading to a shift in AD, which is an actual growth. This can lead to an increase in trade, as Singapore depend mainly on imports for goods and services. But if import expenditure exceeds export revenue, this might lead to a decrease in AD.
ReplyDeleteHowever, as mentioned by germ, if we were to focus mainly on happiness, it may not lead to potential growth as people do not find joy in renewing their skills, as they deem it as troublesome and tiring. This will lead to decreased productivity and may lead to a backward shift of LRAS.
b)GNH is not chosen as it is hard to quantify the well-being of people. Moreover, it is not feasible to find out the well-being of every citizen in the country, as it will take very long to collate the results. In addition, an increase in GNH may not necessarily mean an economic growth. In this case, it will be better to use GDP, which takes into account most economic transactions.
GNH is not used for resource allocation, as different people want different things. It is hard for the goverment to allocate resources efficiently to people based on GNH, as it is hard to please everyone. Those who do not benefit from the allocation of resources may be unsastified with the government. This could lead to a decrease in productivity, as these people go on strike.
Despite GDP having its limitations, this can be overcomed by taking into account the population size of the country and finding out the real GDP instead of nominal GDP. However, this does not mean that GNH is not useful. It can be incorporated into other indicators of Standard of Living. For example, for Human Development Index, one more category of happiness of citizen could be added.
-Kwan Wei
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteThe pursuit of happiness may or may not lead to a sacrifice of economic growth in Singapore. As Singapore becomes wealthier (marked by our high GDP), Singaporeans are more materialistic (as mentioned by steph) and to pursue happiness (in terms of satisfaction for being able to consume more goods/ better goods), they may actually work harder (be more productive) to earn more income and thus, this may lead to economic growth.
However, as mentioned by germ and kwan wei, some people may actually have lesser productivity or even be unemployed (due to lack of interest in jobs or low productivity) in their pursuit of happiness, as they may not enjoy their jobs. This will lead to decreased productivity and may lead to a leftward shift of the LRAS, and thus, full employment level of output decreases.
We can also view the pursuit of happiness in terms of consumption by Singaporeans. Materialistic singaporeans will spend more and as Kwan wei mentioned, this means an increase in AD, (due to increase in consumption), leading to a shift in AD, which is an actual growth.
However, there may be the problem of Singaporeans overspending on imports. If import expenditure exceeds export revenue, our current account may decrease in value or even be in deficit.
Thus, whether the pursuit of happiness will lead to a sacrifice in economic growth depends on whether the "happiness" is derived from working or working harder and thus leading to increased producitvity and thus potential growth, and if happiness is derived from Singaporeans' expenditure on imports or domestic goods.
b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
GNH is not used in other countries as some factors such as "volunteer work, unpaid domestic work, and unpriced ecosystem services" are hard to quantify or to put a monetary value to these factors. As steph mentioned, GNP or GDP are still more practical indicators of growth, as it is easier to compute and quantify. Kaymond also mentioned that since Singapore is highly dependent on trade, FDI, we will need GDP to calculate the corresponding values, current and capital account, or else we will not be able to keep track of the current trends and this is problematic.
As mentioned in the article in Miss Lee's previous post, "GNH was developed in an attempt to define an indicator that measures quality of life or social progress in more holistic and psychological terms than gross national product or GDP. As a chief economic indicator, GDP has numerous flaws long known to economists." As we've learnt, GDP alone is not accurate. GDP calculated must be real and per capita, to equalise the effect of inflation and population size. Even so, GDP has limitations such as not being able to reflect income distribution within a country (rural vs city areas) and also failure to calculate non-market or underground transactions and value of externalities. This is where GNH is useful,as it takes into consideration "non-market benefits (such as volunteer work, unpaid domestic work, and unpriced ecosystem services) in arriving at an indicator of well-being", and thus people are still studying GNH, hoping to perfect it such that it also takes into consideration factors such as income per capita (which affects consumption and hence standard of living.
-Pamela
[b]a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?[/b]
ReplyDeleteI concur with Steph’s point that the idea of happiness varies from person to person, but I think that the concept of GNH as an indicator of wellbeing does not include the notion of materialism (what many contributors have suggested) from the government’s point of view. As quoted from the article, GNH is “an indicator that measures quality of life or social progress in more holistic and psychological terms”. Happiness in this context does not have the same literal meaning as it has to us in everyday terms. I think that the factors used in quantifying GNH would lean towards the side of non-material welfare of the citizens, like social and political wellness. For example, even if a country has a high GDP, if it fails in the aspect of providing basic protection for their citizens against crime, its GNH would reflect this.
Back to the issue at hand, I don’t think that the pursuit of happiness and economic growth are necessarily mutually exclusive goals. Many aspects of non-material wellbeing can translate into economic growth for the country. If a country has a democratic political system (political wellness), the fair election of talented leaders for the country will serve its people well by steering the country’s economic growth positively. If the country has a positive workplace culture, a goal that is admittedly complicated and not easily achieved, employees will likely be more productive as well, achieving happiness and contributing to better economic growth for the country simultaneously.
However, all these changes will take a long time to be effected, and requires a fair bit of investment – overhauling the system, implementing policies, as well as garnering the citizens’ affirmation (a arduous task as it is unlikely that many citizens will be able to comprehend the need for such expenditure nor foresee the long-term benefits). In the long run, I am of the opinion that the net benefit will be positive for the country, if they are willing to take the risk from the start
[b]b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?[/b]
Due to varying expectations of the people in different countries (where factors like religion and culture play a part), GNH can be grossly misrepresented since it is a very subjective index. Case in point: people living in flood-prone areas in Indonesia might consider one flood a year an exceptionally good year, and rate their wellbeing highly; while Singaporeans would consider a flash flood for a few hours nothing short of a travesty on their wellbeing. From a country like Singapore’s point of view, whose citizens are notoriously hard to please, it is logical that the government is reluctant to use the GNH, as it would magnify the country’s flaws to the rest of the world, affecting its reputation (and even its economic growth as investors may see Singapore more poorly).
Like what everyone said above, it is not pragmatic to use GNH since GDP is more tangible indicator and can be used across the board to compare a country’s economic progress with others. Moreover, using GNH to shape economic policies can be disastrous. If a country decides to spend extravagantly on campaigns to reduce discrimination in a country (increase social wellness), and as a result, GDP declines, there will be no more money to fund any GNH goals in the future.
Nonetheless, countries still wish to take GNH into consideration, as it would be myopic and extremely narrow-minded to focus solely on economic growth. GNH is important, but less than GDP in formulating economic policies for countries. As a well said quote puts it, “Money cannot buy happiness, but neither can poverty.”
a) The idea mentioned by many that happiness is accounted for by material gains is more applicable to less developed countries and not so for ac affluent country like Singapore. In Maslow’s Hierarchy of Needs, motivated by unsatisfied needs, once an individual has satisfied his basal requirements, he will look to attain more, in terms of non-material achievement. Thus money, or spending power, is only significantly correlated to happiness mainly in poorer countries, where not all basic needs have been met yet.
ReplyDeleteWhile many covet for richness and material goods, achieving these only give momentary joy when they feel that they are better off than others. This sense of exclusivity, however, runs out fast when they compare with others who are richer or even when they grow accustomed to what they have and look instead to what others have that they do not. Thus, contentment sought through material wants, lasts much more shortly than that found through serious relationships.
Therefore, in the pursuit of happiness, the focus should be on emotional relationships and not consumerism, which will not affect AD. The government has recognized this point and has taken action, implementing the 5day work week for civil servants. It may, however, like Germaine said, hinder the rightward shift of the LRAS and hence potential economic growth if leisure and bonding time is over-emphasized. This is unlikely, though, the government recognizes the need for Singapore, which lacks other sources of income, to maintain a productive and competitive human resource. Hence, work days are not likely to shorten anymore, but this does not deny us of the pursuit of happiness altogether as it is the quality time and not quantitative time spent in relationships that matter.
Moreover, similar desiree’s point, happiness and economic performance are not mutually exclusive. Due to man’s innate desire to excel relative to others (The Economist 2006/2007), most people derive happiness from performing well relative to others. Hence, many aim to do well in work and when they achieve so, feel happier. This improves the efficiency of firms as workers vie to perform better than each other and with a conducive (but not overly stressful) work environment and culture, will also lead to more economic growth.
b) While no other country chooses the GNH for their policies per say, countries are starting to include citizens’ happiness and well-being levels into their policy considerations. Take for e.g. the French government’s recent intent to include happiness as a reflection of economic performance and the British Conservative Party’s leader’s introduction of “general well-being” (GWB) instead of GDP. The increasing importance of happiness in policies stems from the recognition that happiness levels of a country’s population does play a role in economic performance. Layard has argued that around one million people receiving incapacity benefits from depression and stress which made them unfit for work pose a very big social problem.
ReplyDeleteYet it is still not conventional to take GNH into account yet as there are still many limitations. Unlike GDP, happiness levels are very subjective and vary largely between countries due to the different societies’ expectations and demands, thus comparisons between countries, required for many policies, will have severe limitations. Within the country itself, it is also difficult if not impossible to measure accurately the impacts policies have on the country’s general happiness level. Firstly as many can be myopic, and have unpractical demands/views, which will not be good for the economy in the long run, and giving in just to raise happiness levels is just not feasible. For e.g. transferring much more resources from capital goods to consumer goods will definitely cause a leap in happiness level for a period of time, which will make to economy look very successful based on GNH. However, the PPC of the country will not be able to expand in the future and its firms and labour resource may not be able to be viable in the global market, which will be very detrimental to the citizens’ happiness then.
Secondly, obtaining the measure for people’s general happiness level is questionable, especially in countries with large populations. Self-reporting will be the most cost and time-effective way, but poses a problem of credibility. Happiness is volatile and tends to fluctuate from period to period affects people’s happiness measure. Besides that, not all respondents may be mature enough to accurately assess their emotional state. For instance, drug addicts would, by their own estimate, measure happy all the time. It is also impossible to record the happiness level of everyone, especially in countries with people staying in places that are hard to access.
Therefore, many countries’ governments do not base their economic outlook solely on GNH or any other measure of happiness, as effects will be disastrous, but realise the need to keep it at acceptable levels and to integrate it into policies where it can be mutually advantageous for the economy and happiness level.
PS pardon me for the quote etc, cuz i did a research proj on a similar topic before
Economic growth is determined by investments, domestic consumption, and export and import markets, government policies that will either result in the AD shifting to the right or the LRAS to shift to the right (potential growth). A shift in AD will be the one that determines whether economic growth is present.
ReplyDeleteIn Singapore, there co-exist different societies-be it in terms of religion or the income classes of the population- that will have different ways of pursuing happiness.
Religious people often seek to attain enlightenment and engage in religious praying activities to do so (I’m just making a point, this may not be true for all religions / religious people; it’s a generalization from the impression that the monks meditate their way to nirvana). These activities do not bring about economic growth in terms of its contribution to the country directly through spending (if we discount the purchase of joss sticks and etc relative to higher priced luxury goods). Indirectly, they may discourage foreign investments as investors tend to shy away from religious intensive countries due to speculated racial riots or racial tension & instability, especially in a racially diverse country like Singapore.
For the income classes of population, pursuing happiness may come in the form of consumerism (& materialism), or able to get a job that they are highly passionate for.
Consumerism will lead to increased domestic consumption, especially foreign luxury goods and more spending domestically.
I won’t be expecting a certain result because whether or not Singapore will experience economic growth in this manner is dependent on the extent these activities are carried out. Religious people may still devote time to their faith, but if they still work, economic growth can actually increase because happier people generally means in increase in work productivity (quality of labour & quantity if religious people do still work).
b.)
As mentioned by Desiree, happiness may not necessarily be attained through increased consumption of material goods & services but through social and religious methods as well.
This makes GNH difficult to set a common benchmark as everyone has different perceptions or ideals of happiness. GDP (real or nominal) is much easier to utilize since it is standardized, despite accounting difficulty in summing up the values of factors, assigning values, excluding and including which ones.
However, GNH can still be studied, and I would say, as a supplementary method to discuss the standard of living across people of similar occupations or in the same industry, or under a standardized category.
Should GNH be used for resource allocation, it will bring about market inefficiency, possibly leading to market failure; this requires government intervention and then again may lead to government failure.
This is because in economics we study it to allocate scarce resources in the best way possible to minimize opportunity costs and to maximize welfare to meet unlimited human wants.
We do not have enough resources to allocate through GNH, and not everybody can be satisfied through such a policy. This is especially through in larger countries. Bhutan is a small nation so its still relatively easier to work with such a policy
a)
ReplyDeleteThe variation in perspectives on the term “happiness” has led to some degree of uncertainty to the answer of this question.
If happiness were to be defined as the non-material achievement, which is likely the case in more affluent countries like Singapore, the pursuit of happiness (in terms of leisure time, clean environment, religious faith and harmonious community relationship etc. ) would less likely contribute to the economic growth in Singapore by shifting the AD and LRAS curve to the right. However, given a happier mindset/status, Singaporeans are likely to be more productive at work, hence, compensate for any leftward shift of AS caused by shorter working hour, greener but less efficient production method etc. Therefore, from the supply side, although the pursuit of happiness does not benefit the economic growth, neither does it mean a sacrifice.
On the other hand, if happiness is correlated with richness and materialism, the pursuit of happiness would mean greater purchasing power, greater monetary gain etc. then the pursuit of happiness amounts to increased consumption and therefore shifts the AD curve to the right. Such accretion in consumption and personal investments would mean a blessing for Singapore economy.
b)
Although GNH takes into account the happiness level, a significant part of the society’s non-material well-being, it is too narrow a measurement to indicate the country economic growth or provide a full picture for resource allocation.
The problems with GNH includes
-the difficulty in measurement due to the subjective nature of happiness
-inability to convert to a universal standard for comparison between the countries
-transfer resources to consumers’ goods increases GNH but refrain potential growth if too little resources are allocated for capital goods
A more realistic measure would be real GDP per capita, which is universal and easier in terms of data collection.
However, real GDP per capita has flaws and limitations as it does not consider income distribution and composition. If further studies on the income distribution, economy structure of the society are in place, together with more holistic measures such as HDI and MEW, the government is likely to make a better decision on policies for economic growth and resource allocation.
---chenglu
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteHappiness is rather subjective to different individuals but generally, it should mean a higher standard of both material and non-material welfare. However, the article seems to focus more on the 'pursuit of happiness' through non-material aspects which could be measured by GNH. Even though GDP is flawed because it is unable to take into account what GNH can, it is probably not practical to use the concept of GNH to shape economic policies for economic growth. I think the GNH should be used as a complement to GDP instead of using GNH as a sole indicator of standard of living.
Using GNH would place the objective of improving non-material welfare at higher priority which might improve the standard of living of citizens in the short run but it will not be sustainable in the long run. Too much expenditure on non-material welfare like healthcare would lead to a fall in GDP as there is opportunity cost since less funds would then be available for generating growth in the economy. Spending on aspects such as security against crime would not generate income. In a small country like Singapore, this would affect us greatly as there is opportunity cost incurred. For example, Outward FDI might be reduced with less funds allocated for investment which would affect Singapore's economy greatly since we depend much on trade and FDI to boost our economy.
However, improving material welfare could also stimulate economic growth. For example, a policy to improve healthcare services and infrastructure could result in inward FDI increasing and private consumption of healthcare services could also increase, leading to economic growth.
In conclusion, I think that the pursuit of happiness might not necessarily mean that economic growth has to be sacrificed. Improving material and non-material welfare should be on a balanced scale to ensure sustainability and continuous improvements in both aspects.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
I think that this could be because the GNH would provide a holistic account of the general well-being of the people. This could be a bad point since it would also magnify the inadequacies of the government. In many countries, developing and ensuring continuous economic growth is the main objective because the improvement of non-material welfare would take a significantly longer time period to accomplish and also requires funding from a growing economy. In developing countries, using GNH would be impractical since they do not have the means to ensure sustained efforts in increasing the standard of living the people over a long period of time for there to be significant improvement. In using GNH, too much resources would be allocated to developing non-material welfare and this would have devastating impacts on the economy.
It is also difficult to ensure that the GNH is an accurate indicator since happiness is very subjective. Hence, it would be very hard to conclude if it is reliable. Using unreliable data to create policies would be disastrous. For example, in the case of worsening pollution, an environmentally-conscious person might be very unhappy with the situation as opposed to a person who is not environmentally friendly being happy with the current levels of pollution.
However, GNH could be beneficial in allowing the government to have a clearer picture of the social and psychological well-being of the citizens so as to craft possible policies in the future when observing a decreasing level of GNH. Increased social and psychological well-being of the citizens would lead to peace and cohesiveness of the society which could attract investment compared to a country caught in political unrest.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteLike what Cheng Lu said, the definition of happiness is subjective here. Some Singaporeans may already be weary of hectic working lifestyles even though they are able to earn quite decent incomes from their work. To this group of people, happiness may mean shorter working hours and a more leisurely lifestyle. In this context, this particular pursuit of happiness would impair economic growth as reduced working hours would mean reduced production.
If happiness were to mean more materialistic pursuits, Singaporeans would try to work harder in order to earn more money. Production of goods would increase, causing a shift in LRAS to the right and increase potential growth. AD would shift to the right as well if people prefer to spend more to get ‘happiness’. Short term supply would increase.
It is possible to have both happiness and economic growth as well. Shorter working hours might not necessarily mean reduced production as workers can learn to be more productive and produce the same amount of goods in a shorter time. The Singapore government has been putting emphasise on productivity and improving worker’s skills and employability so as to achieve this.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
Most countries use GDP for this purpose mainly because it is easier to calculate tangible values. Also, it is faster and the values are non-arguable to a large extent. GNH is highly subjective and it would be difficult to decide on a fixed monetary value for it. Different people might have different views on what a good quality life entails. Taking the example of pollution, some may view cleaning up as an economic cost, but others may view it as welfare to society and is hence a benefit.
GNH runs a high risk of being not representative. The government may not be able to gather survey from everybody on their well-being, and furthermore such data can easily be manipulated by the government.
People standard for happiness in different countries may vary as well, and hence the GNH may not be effective in comparing across countries.
However, there is no need to give up on GNH completely as it may still provide governments an insight onto the psychological well-being of the people.
a) As can be seen, most of us question the exact definition of "happiness" here in the context of Gross National Happiness(GNH). According to the article, GNH "assesses changes in the social and psychological well-being of populations". This means that we're looking more into the aspect of the general well-being of people and thus i believe that it is the non-material aspect we're talking about here.
ReplyDeleteIf that is the case, in my opinion, the emphasis on the happiness level of Singaporeans will mean a decrement when measuring the economic growth in Singapore. This is because as all of us are vividly aware of, the fast-paced life in Singapore, which involve most people working very, or even excessively hard is the main driving force for the prosperous economic well-being of our country. As such, it is understandable the opportunity cost of the loss of leisure time is incurred for many Singaporeans, and this results in a reduction of their happiness level as perhaps, they are unable to spend enough quality time pursuing their interests or with family and friends. True enough, it is commonly known that the stress level in Singapore due to the hectic lifestyle and intense competition in striving for excellence is causing many Singaporeans to feel pessimistic towards the issue of happiness in living here. As such, if we were to use base our economic growth on GNH, it will lead to a definite drop in Singapore's ranking in terms of economic well-being.
However, i am not claiming that the pursuit of happiness will directly impact or slow down our economic growth in definite terms, but rather, i feel that the measurement of economic growth based on GNH will lead to a decrease in the value of Singapore's economic growth. In fact, the pursuit of happiness can actually be complementary to economic growth if in a country, people are generally happy with their everyday life while they are also busy working and striving to improve the country's economic performance.
b) Like what everyone has mentioned, unlike GDP, there are calculation problems involved when using GNP as an indicator of economic growth, when it is supposed to be a measurement method in itself. Firstly, it is very difficult to give a definite value for a certain level of happiness. Secondly, it is even more difficult to find out the actual happiness level in a country. This is especially so when the country consists of developed and developing regions, because the definition of happiness is subjective to people in the different areas (as everyone has mentioned :), and there will also exist data collection problems in the developing regions.
However, since all of us know that GDP itself has several flaws no matter how widely it is being used as an economic growth indicator, GNP can therefore be used as a complementary indicator to GDP. GNP mainly measures the non-material aspect of economic well-being, and thus when both GDP and GNP are used together, it will give a very well-rounded measurement of a country's economic growth, in terms of all 3 aspects of economical, social and psychological well-being.
a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteAs questioned by everybody before me, the idea of what exactly constitutes happiness is very ambiguous. The definition of happiness can differ from person to person, why it can even be different for the same person in two different time frames. Broadly, it can be broken down into two areas – happiness arising from material and non-material well-being.
Economic growth is currently measured in terms of GDP which is the material well-being of a citizen. As output grows and people earn more, the GDP would rise and consequently the economy would grow. In such a situation, people would be happier as well since their income rises. This can be translated to an increase in the material well-being of a citizen. It is assumed to a large extent that people generally want to earn higher incomes and that they strive to achieve that. With this increased income, people can buy and consume more goods and this would make them happy. Thus people are constantly trying to increase their expenditure budget (which requires them to work harder) which results in economic growth. The pursuit of material happiness can be directly quantified into economic growth. However, this type of happiness is only common in developing countries. With Singapore being affluent, most people are not very worried about material gains since they can already afford it.
This brings me to the next type of happiness which is caused by the non-material well being. As mentioned by Yee Ting, the article itself seems to imply that non-material happiness is more important. As shown in the article, non-material happiness is harder to calculate as some areas are hard to quantify. Thus using the GNH to measure a country’s quality of social life may be hard and as correctly pointed out by Yee Ting, using the GNH would definitely result in Singapore being in a lower position owing to the hectic lifestyle of Singaporeans. However, this does not mean that Singapore will not face economic growth if it were to follow such non-material happiness. Like Desiree said, this non-material happiness such as the “positive workplace culture” can encourage people to work harder making them more productive resulting in economic growth. Thus pursuit of this type of happiness can also result in economic growth.
However, this can only be achieved in the long run and would take a fair bit of time to implement across the board. Thus, risks will have to be taken by the government and ensuring proper pursuit will result in greater economic growth. Essentially, the pursuit of happiness and economic growth can be related positively and improvements to one would result in the rise of the other.
b)Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
ReplyDeleteGNH is a very subjective tool in measuring economic growth as what pleases a certain group of people may not please another group. This point is exemplified in Desiree’s point about happiness levels differing between Indonesia and Singapore. Thus using GNH would result in very different policies being made between countries and compatibility would be hard. This would be disastrous as trade between countries could be hampered if a compromise cannot be reached. Furthermore, GNH includes many factors that are hard to quantify such as leisure time. It is also almost impossible to determine the happiness level of a country. Thus, GNH would become less and less accurate as more of these factors piled in. Hence GNH is not a very reliable method of formulating policies as compared GDP.
GDP is calculated in a specific manner and it is done in this very manner for every country thus ensuring uniformity and allowing for better resource allocation around the world. GDP is more tangible as it can be much more easily quantified as compared to GNH. Policies formulated from GDP tend to be more consistent as compared to those from GNH as happiness as change definition from era to era. However, it is still important to study GNH as it gives the government a rough idea of whether its people are happy or not. It can be used as a measure of the standard of living in a country.
As mentioned by Yee Ting, it is not wise of us to look at each measurement on its own. While one tells us about the economic performance of a country, the other related measurement tells us about the happiness level in a country. It is therefore necessary for us to examine both in unison to be able to view a holistic picture of the situation at hand.
This question seems to stem from the fact that economic growth has not seen a proportional correlation with happiness in the past years. It goes to show that while material well-being has improved, the social aspects of well being has not been addressed very well by classical economic theory. This problem, i feel, has arisen because political leaders from many countries are too driven towards the classical notions of economic growth to seriously consider the impacts on society's well-being. However,the study of behavioral economics also implies that both pursuing happiness and economic growth can increase proportionally given the right policy implementations. The case for the building of SIngapore's casino is an example of how economic growth and happiness(quality of life, entertainment opportunities in this area)go hand in hand, although this applies only to certain people. The economic reason for building a casino resort was that it provided opportunities to attract investors, improve Singapore's tourism industry and increase employment for locals. At the same time, social welfare groups like churches charged back, rebutting that this would promote social ills e.g. addiction and money squandering.Since it is natural for dissent to occur between people , happiness can never be experienced by all. As such, to cater to the 'happiness'of the churches would mean sacrificing growth opportunities for tourism and FDI.
ReplyDeleteHowever, whilst this may be true, such a case is limited in scope. Case in point: The development of Punggol residential areas, such as a site used for mixed commercial and private residential development. Not only does this benefit residents in Punggol by vastly improving their quality of life, this project can potentially lead to greater business prospects for Singapore. (New industrial sites, business centres etc) Not only are Singaporean's 'happiness' levels increased, economic growth can be expected to rise as well. Hence, careful consideration is pertinent when planning for economic growth and ensuring it isn't fulfilled at the expense of society's well-being, at least in the long run. My conclusion is that both growth and happiness can be achieved without necessarily forgoing the other element.
b) It seems everyone more or less feel that subjectivity is a crucial limitation for such an index (and i agree too. I guess my comments simply serve to help reiterate the truth. The obvious reason for not choosing GNH is that the value systems differ in many countries. Just to supply more examples: Guatemala is ranked one of the top few happiest countries but is frequently ravished by hurricanes and earthquakes. Some say they managed to stay happy because of their natural supply of bananas and coffee. Who knows? Austria is an extremely green country with more than 70% of its energy being renewable(good living quality). Also, it appears to value democracy and freedom of views, with 16yrs old being the eligible voting age.Yet countries which are less democratic e.g Denmark still manage to be one of the happiest countries. (Seems like not everyone values freedom of expression as much as others.) In Singapore, the furore over the foreign worker domitory saga in Serangoon clearly reflects our society's cultural sensitivities which might not be present in a country where social distress is a norm.
As such the degree of society's values need to be considered before using any index and the cost and benefits of implementing policies based on such index must be weighed out. This is not to say that such index should be ignored totally as they do provide some useful insights and truths for leaders to maintain society's welfare, e.g where religiousity/spiritual well-being is considered.
a)Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeletePersonally I felt that even as people in Singapore are materialistic. pursuit of happiness will still indirectly cause a sacrifice of economic growth. A few weeks ago, there is this article in Straits Times talking about the happiness level of people living in Singapore. Results of the survey conducted have shown that people who are from the "lower class" earning lesser are the most happy lot. Whereas, those from the upper class, working in big firms actually felt more stressful and don't feel as happy. This group of people actually spent most of their time and effort at work, thereby contributing to Singapore's economic growth. However, the opportunity cost here is their leisure time, which is why they don't feel as happy. On the other hand, those who have more leisure time to themselves felt happier. Therefore, I believe that pursuit of happiness will more or less affect the economic growth.
yixin
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
ReplyDeleteGNH is a measurement which takes in a lot of aspects GDP doesn't and solve the shortcomings of it. However, it is very difficult to collect the data needed for GNH. One example will be the happiness level of people which is so subjective and people feel happy and contented towards different things(Like what Ranon mentioned). So how are we going to measure happiness level since surveying the people will result in inaccurate results?
In this case, it might be wiser to take GDP as the tool for measurement because GNH, on the surface might solve all the problems GDP might give, but in the end, might be more inaccurate due to the delay in data collection and how subjective the requirements are.
a) Do you expect that the pursuit of happiness will mean a sacrifice of economic growth in Singapore?
ReplyDeleteFinancial statuses are but one of many factors which contributes to happiness. How much this financial factor weighs in on the happiness scale varies from person to person. As what everyone else have already mentioned, the formula of happiness cannot be deduced. To some money may be their greatest source of happiness while others regard money secondary to other aspects of life. However, for Singaporeans who are mostly rather materialistic, we can assume that generally Singaporeans would want more than just our basic needs met and that monetary gains ranks fairly high on our happiness index.
In my opinion, Singaporeans in general are sacrificing happiness for higher economic growth despite factoring in the importance we place on money. Although having more money does provide us more happiness, we seem to be giving up too much of other aspects of happiness for it. Singapore's GDP may be increasing, but so are the stress level of Singaporeans. We have lesser and lesser time for ourselves and we try to make up for it with our increased earnings but sometimes it is not a fair trade off. For example, mothers now may place more emphasis on their careers and try to make up for it by hiring maids to take care of their children. This will eventually result in a distant relationship between mother and child. The value of relationships would naturally be considered much higher than the slight increment in income. Furthermore, Singapore has become so commercialised that we are led to think that materialism brings us happiness. These material things only provide us temporary satisfaction and the pursue of materialism will drag us into a vicious cycle. There will always be better products on sale eventually, causing us to derive less happiness with our purchase. If all the factors leading to economic growth were to remain the same, then in order for Singaporeans to pursue happiness it will require a sacrifice of economic growth.
Nonetheless, in order for Singapore to pursue greater levels of happiness, economic growth need not be sacrificed. This can be done so by increasing economic growth via methods which would not infringe into the people's happiness. One example would be to reduce working hours but maintaining output level by means such as improving the quality of labour or using more advanced technology. The possibility of these occurring are high for Singapore as our education standards are improving, which translates to a more efficient labour force in future, and we are a developed country with considerable involvement in the technological field. Additionally, when employees are happier, they will become more productive. Of course we must not forgo economic growth altogether in the name of happiness as even though money may not be able to buy happiness, it still matters, especially to us Singaporeans.
b) Why is it that no other country chooses the GNH for their policies on economic growth and resource allocation but continue to study its wider good and spiritual benefits?
ReplyDeleteThough most agree that GNH is by far a better indicator then GDP, it is ironic that everyone still continues to use GDP as an indicator for the standard of living. This is probably because the GNH indicator is ideal but unrealistic. One of the main problem would be allocating a suitable value to the intangible. Whatever the value may be, people are bound to disagree with it since the value people associate with the various aspect differs. Furthermore, the people may also argue with the aspects factored in into counting GNH as they may feel it has left out some other important measures or that some measures are being overstated. GDP, on the other hand, has little room for arguments as compared to GNH since it involves calculating tangible things with fixed values attached to them and therefore is often preferred.
Another deterrence to using GNH may be the difficulty in convincing other countries to use the same indicator. Such indicators will only serve its function if comparisons can be made as a single value along will be meaningless. Developing countries especially will object to it as data collection is already a problem for them and calculating GNH which requires even more data collection will result in a heavier burden for them. Others may feel that GNH is still not a suitable indicator. The ones who may be primarily responsible for the rejection of the GNH may actually be the developed countries. As what Ranon had highlighted, “Guatemala is ranked one of the top few happiest countries but is frequently ravished by hurricanes and earthquakes”. It suggests that the happier countries are actually the poorer nations. Perhaps these developed countries, who undoubtedly have more say in international issues, reject the usage of GNH as they are afraid of being deemed as having a lower standard of living and as a result will no longer be considered as developed.
The reason countries continue to study the GNH may be perhaps they are all in search for a perfect indicator which is both ideal and realistic.