Measuring development:

policies and indicators

Risto Heikkinen International business

6290 Arcada Polytechnic 2011

1
DEGREE THESIS

Arcada

Degree Programme: International Business

Identification number: 6290

Author: Risto Heikkinen

Title: Measuring development: policies and indicators

Supervisor (Arcada): Andreas Stenius

Commissioned by:

Abstract:

We as human beings have many layered relations, not only to each other but to the planet we inhabit. It provides everything we need to
support our life systems. This is easy to conclude, since it is clear that scientific interpretations of our existence, as well as expressions
from spirituality to arts are all eventually drawn from relationships between us, the environment, and its laws within. Being the
environmental foundation for the external existence of the human race, natural resources are also the foundation of our economic
systems and activity. Therefore it is reasonable to question our measurements of development, especially the way does growth in it
affect positively towards majority of humans and environment we live in? What is the way we truly want to develop? And what are the
methods and measurements that help us to get there? These questions are approached from the perspective of a descriptive and
normative comparison study and as a result, answer providing for the relationship of positive development and measurement methods,
as well as an example for a corrective solution is offered via core values operating these measurement indexes.

Keywords: Source, values, indicators, policy

Number of pages: 55

Language: English

Date of acceptance:

2
Table of Contents
1. Introduction ..................................................................................................................................4

2.Measuring development ................................................................................................................6

2.1 Introduction to measurements ................................................................................................6

2.2 The Gross Domestic Product (GDP) ....................................................................................10

2.2.1 Values and policies related to GDP ...............................................................................11

2.3 Genuine Progress Indicator (GPI) ........................................................................................16

2.3.1 How GPI Measure Progress ....................18

2.4 Gross National Happiness (GNH) ........................................................................................22

2.5 The Happy Planet Index (HPI) .............................................................................................25

2.5.1 How HPI measures development ..................................................................................27

2.6 Greenhouse Developmental Rights (GDR) ..........................................................................29

2.7 Other notable sources ..........................................................................................................33

2.7.1 Facebook Global Happiness Index ................................................................................33

2.7.2 Comparison with Maslow’s hierarchy of needs ............................................................34

3. Comparative Study of measures of well-being and development .............................................38

3.1 Descriptive comparison ........................................................................................................38

4. Results and discussion ...............................................................................................................41

4.1 Idea with development threshold and standard deviation ....................................................44

3.2 Values common behind the measurements itself .................................................................45

3.2.1 Example guidelines to constructive commercial activity ..............................................48

5. Notes ..........................................................................................................................................49

5.1 Further questions ..................................................................................................................51

3
List of references and appendix .....................................................................................................52

References ..................................................................................................................................52

Appendices .................................................................................................................................54

1. Introduction
We as a human beings have many layered relations, not only to each other but, to the
planet we inhabit. It provides everything we need in order to support our life systems.
This includes not only necessities of nutrition and energy making physical development
possible, but also nutrition for our growth in mental and spiritual aspects as well in the
form of emotions. This is easy to conclude, since it is clear that our scientific
interpretations of our existence, as well as personal expressions in form of arts are all
eventually drawn from relationships between us, the environment and its laws within.

Being the environmental foundation for the whole external, material, existence of the human
race, nature’s resources are also the foundation of our economic systems and activity. Since
scientific proof for similar planets and similar races still waits to emerge, it is very likely that
planet Earth and humans are very rare in the universe, if not unique. Therefore it is reasonable to
question our measurements of development, especially with the question does growth in it affect
positively towards majority of humans and environment we live in? Statements regarding this
4
development can be verified from several different cultures, sciences and world-view
perspectives throughout the world. Conclusion of measurements also from, for example, report
conducted autumn 2009 by a commission set by the French government and led by Professor
Joseph E. Stiglitz.

In this paper I aim to recognize, not only the direction led by GDP –based thinking or advantages
and issues related to it, but more importantly, possible complementing development
measurements which share a purpose of reaching a sustainable development model which can be
considered as a prerequisite towards wellbeing and happiness of humanity with the help of
economic activity.

What is the way we truly want to develop? And what are the methods and measurements that
help us to get there? Most importantly, do humans already have what is needed for it as a whole?
It is presumed that happiness and wellbeing can be achieved with quite common traits between
humans; therefore I believe that common nominators for prerequisites can be found as well if
ideas from different perspectives as well as different parts of the world are observed via
methodological help of descriptive and normative comparison study. Via the results of the
descriptive methodology, an example for a corrective practice is presented in form of
constructive business guidelines and example measurement methods are presented with results.

5
2.Measuring development

2.1 Introduction to measurements

The Oxford dictionary for advanced learners defines measurement index as
follows,
http://www.askoxford.com/concise_oed/measure
verb 1 determine the size, amount, or degree of (something) by comparison with a standard unit. 2 be of (a specified
size). 3 (measure out) take an exact quantity of. 4 (measure up) reach the required or expected standard.

http://www.askoxford.com/concise_oed/index
noun (pl. indexes or especially in technical use indices /indiseez/) 1 an alphabetical list of names, subjects, etc., with
references to the places in a book where they occur. 2 an alphabetical list or catalogue of books or documents. 3 an
indicator, sign, or measure of something. 4 a number representing the relative value or magnitude of something in
terms of a standard: a price index. 5 Mathematics an exponent or other superscript or subscript number appended to a
quantity.

Indicators measure policies. Indicators also embody values to be carried into those policies. In
today’s economics in general, when implementing they tend to carry on policies or actions based
on current, often international trends of development, without taking into consideration the
values behind such trends. Overcoming this is possible by recognizing the bigger picture and the
fact that between values and policy implementation are indicators that mediate between them.
Indicators capture imagination easier and help convince the lay people, but it is not always easy
for the people to discern that indicators are not value neutral, and that the underlying values and
principles eventually determine actions and policies. In fact, one can go beyond this and say that
indicators drive society in certain direction. (Professor Karma Ura, WHO 2008).

From the policies implemented through indicators, due to their interrelation, it is possible to gain
glimpse of the values that operate behind, both the indicators and policies, by comparing these
means with an end they produce.

6
“In effect, statistical indicators are important for designing and assessing policies aiming at
advancing the progress of society, as well as for assessing and influencing the functioning of
economic markets.” (Stiglitz sen Fitoussi 2009 p.7.)

“What we measure affects what we do; and if our measurements are flawed, decisions may be
distorted. Choices between promoting GDP and protecting the environment may be false
choices, once environmental degradation is appropriately included in our measurement of
economic performance. So too, we often draw inferences about what are good policies by
looking at what policies have promoted economic growth; but if our metrics of performance are
flawed, so too may be the inferences that we draw.” ( Stiglitz sen Fitoussi,2009 p.7.)

“Economic growth is intended to be a means to the end of social well-being. However, as society
focuses on what is being measured, the means become the end. In other words, Western nations
make the mistake of equation economic growth to social well-being.” ( Dasho Karma Ura and Ms Tshoki
Zangmo 2008)

Most measuring methods used in today’s societies focus their policies on aspects such as
financial development which means growth, nature and environmental condition, and various
functions producing societal well-being in mostly material perspectives. In addition to that, great
variety of things producing well-being and happiness are valued by standards outside the
material and mental dimension. These are as important things to pay attention to, since what
good are financial and technological value generated, or achievements from environmental
resources, unless it is also a vehicle for that which brings true value, happiness and wellbeing.
Therefore must be understood that the environmental resources as a whole are a value-basis for a
possibility to any of this to appear and therefore indexes measuring these resources with honesty
can be important complementation to what is used by economics.

7
 Oxford dictionary for advanced learners defines environment as follows,
http://www.oxfordadvancedlearnersdictionary.com/dictionary/environment
1.the conditions that affect the behavior and development of somebody/something; the physical conditions that
somebody/something exists in.
2.the natural world in which people, animals and plants live

“I suggest that aesthetic sensibilities are a part of the way in which spirituality helps us
maintain our sanity. To the medieval monks, it was obvious that through the simple flowers of the
field, God had given humanity a gift of healing and peace. Today, we are at last relearning this
simple truth.”(Dr. David Hoffmann, PhD 2003)

“From economical perspective, measuring happiness and well-being is reasonable as well.

Mental and emotional well-being of citizens improves their performance and broadens the
intellectual, physical and social resources of a nation. They cause less stress on the national
health care-system. Citizens with better emotional and mental health are easier to relate to and
work with, tend to be better decision makers, are more creative, and outperform peers in
problem-solving, innovation, persistence and productivity.” (Med Jones, 2006)

Well-being and happiness are considered often subjective, with more than one definition
existing. One example is from Oxford dictionary for advanced learners, which defines well-being
and happy as follows;
well-being - noun the state of being comfortable, healthy, or happy. http://www.askoxford.com/concise_oed/wellbeing

Happy - adjective (happier, happiest) 1 feeling or showing pleasure or contentment. 2 willing to do something. 3 fortunate and
convenient: a happy coincidence. 4 in combination informal inclined to use a specified thing excessively or at random: trigger-
happy. DERIVATIVES happily adverb happiness noun. http://www.askoxford.com/concise_oed/happy

Subjective life satisfaction is regarded as a measure of an individual's perceived level of well-

being and happiness through that unique individuation. It is frequently assessed in surveys via
different and often simplified questions. Answers are sometimes used as a synonym for

8
subjective happiness and subjective well-being. However, due to the different world views
accumulated via personification to what in here are viewed by the name of values and policies,
these concepts can be seen so much broader than what can be measured in this simplistic way:
The most commonly used question probing life satisfaction, as found in the World Values
Survey (http://www.worldvaluessurvey.org/) is as follows:
"All things considered, how satisfied are you with your life as a whole these days?"

Respondents are typically asked to respond on a scale of 1-10. Life satisfaction index that
includes this is used for example, in the Happy Planet Index. Bias to accuracy in which
individual answering the above mentioned question actually considers one’s life from every
direction via his or her true values, especially with the possible difference between long term and
short term happiness, exists. Also the possible environment of questionnaire, result of policies,
can produce defenses that influence answers and respondents willingness to answer. This implies
that methodologically the measurer cannot affect the level of validity when measuring subjective
well-being and happiness of individuals, but only prerequisites. This is the same when
approached from perspective of subjective and objective values, that are prerequisites for both,
subjective and objective well-being. These are listed, when identifiable, alongside the indicators
presented starting with the Gross domestic product, which is somewhat considered as a
benchmark index for other measurement indexes viewed here.

value(value), noun 1
[mass noun] the regard that something is held to deserve; the importance, worth, or usefulness of something:your support is of
great value
the material or monetary worth of something:prints seldom rise in value[count noun] :equipment is included up to a total value of
£500 2
(values) principles or standards of behaviour; one's judgement of what is important in life:
http://oxforddictionaries.com/view/entry/m_en_gb0919770#m_en_gb0919770

9
2.2 The Gross Domestic Product (GDP)
Two most used index measurements for development are Gross National Product (GNP)
and Gross Domestic Product (GDP). Main difference between these is that where GNP
regards value of products made by nationals, for example Finnish people as a whole,
GDP focuses on the value of final goods produced by the nation itself, for example
Finland. GDP therefore is a basic measure of a country's economic performance and is
the market value of all final goods and services made within the borders of an economic
area, such as a country, in a defined period usually being a year.

What GDP calls final products consist of products which do not require any additional
transformation prior to use, and are presumed to be used by end users instantly in that time
period for consumption or investing purposes. Final products are also therefore final energy
values consumed to a certain production, and within that production. It can consist of goods or
services, which can be assigned a monetary value to represent that energy. Therefore total GDP
presents total energy used, valued and measured in monetary terms in a given region for
commercial purposes deducted by imported amount of energy in that certain time interval.

Gross Domestic Product is simple and effective when measuring commercial productivity and
therefore also material standards of living and consumption in given areas. It is standardized to
current GDP, which is measurement expressed in current prices and of the period being
measured, and nominal GDP, which is the production of final products valued at current prices.
Real GDP has been useful in measuring if production has decreased or increased despite changes
in other variables, since it values production of final products at a constant price level.

Components that form Gross Domestic Product are as follows: consumption in form of private
consumption and investment activity, usually the largest component. This includes every form of
goods and services consumed by individual or private entity. Investments consist of activities
contributing to future consumption by the same entities. Along with private consumption and

10
investments, GDP includes similar activities performed by public entity, such as the government.
These can be defined as public investments in form of expenditure of final goods and investment
methods stimulating economic activity, and public expenses for example in form of maintenance
and functional expenses. Finally, besides domestic activity, GDP is affected by relation of
imports and exports across its borders. Imports include supply received for domestic
consumption from outside its borders, whereas exports define the amount produced for
consumption outside these same borders. In order to see that ratio, exports have positive effect
on GDP as imports are deducted from it. Due to the fact that GDP measurement is internationally
standardized and measured frequently and consistently, it is reliable and up to date in its purpose.

Simplified formula for GDP is as follows:

+ Private consumption and investments

+ Public investments
+ Public expenses
+ exports
- imports

=GDP in fractional reserve currency adjusted to value of local currency.

Gross Domestic Product is not only measured for a single countries or larger economical
areas, but also for smaller segments inside a country. Example of this is useful
measurement of GDP per capita, where GDP of defined area is divided by entities inside
that area contributing to and affecting it. (Formula at UNDATA -webservice)

11
 2.2.1 Values and policies related to GDP

Gross Domestic Product has been gaining status as a main measurement of

performance and growth slowly over years it has existed, taking attention from the
broader picture and actual direction of development, as well as the underlying reasons
and values behind it. “It is widely used by policymakers, economists, international
agencies and the media as the primary scorecard of a nation‟s economic health and well-
being. Yet, as we know from its creator Simon Kuznets, the GDP was never intended for
this role (Kuznets, 1934)”(Redefining Progress: GPI 2006)

This usage is well understandable, for GDP was chosen to economic measurement during the
time when material well-being was not certain, and building new was necessary right after the
world war. It was seen necessary to focus economy in a oversimplified way of growth for
providing this well-being quickly to countries many people. It is clear that GDP is a very narrow
tool to measuring anything but growth in quantity of commercial production, technically this
means spending of energy and resources of that area. Being so simplified, GDP does not take
values into account, elements such as environmental issues related to pollution and finite part of
the resources available, both attached to economic growth itself. Therefore it does not recognize
the ratio or quality of the energy resources used to the energy of final products. It should also be
understood that GDP is actually measuring consumption of resources instead of final products
although presented differently, for the actual consumption of final goods produced can only be
assumed. Therefore when rise in GDP is set as an objective, it automatically means only that
consumption of resources rise. This is similar, as said regarding to GNP.

“GNP also fails as a measure of social well-being, since it does not willingly account for assets.
Businesses gauge financial condition and performance by using a balance sheet and income
statement. Using GNP to measure social well-being (or even economic performance) would be
like a firm using only income statement to measure financial condition” (Redefining Progress: GPI
2006)
12
What is also important, GDP does not show how large standard deviation of income is,(Stiglitz sen
Fitoussi, 2009 p.13.) so it logically cannot reflect actual well-being or happiness of people in defined
and measured area. It is said that several actions that clearly affects negatively to well-being and
happiness of the population still contribute positively to Gross Domestic Product (GPI). For
example weapons manufacturing, health care costs and increased amount of physical spending of
natural resources. Same way, there are several activities that contribute to general well-being
and happiness but lower the level of GDP. Examples of this are activities which do not involve
direct commercial activity, such as parenting, mentoring and volunteer work. Similarly, GDP
does not differentiate sustainability of products produced. (Professor Karma Ura, WHO 2008). Because
of this approach, GDP as an indicator embodies only values of itself and carries these to its
policies. When these values it presents and implements cannot take into account the quality of
the result and reason of the consumption itself, it cannot possibly show the quality to whom it is
supposed to bring happiness and wellbeing to reliably, or at all. Statement that GDP does not
support or reflect well-being of humans is supported by statistical data and findings in reports,
such as released by commission led by Professor Joseph E. Stiglitz fall 2009. It can also be seen
in figure below (Fig.2).

Figure 2. Figure composed from http://www.gapminder.org shows that high life expectancy, which is element considered to
positively affect well-being of human beings, does not necessary correlate with strong GDP per capita.

13
Biologists talk about physical growth as a process which has an optimum level beyond which
further growth is no more beneficial. In some cases, depending on the values of growth, it might
even be the opposite. Economic growth can be subjected to the same analysis, for similar values
shared with both. Aside from the obvious environmental impacts in many layers shown above,
there is increasing evidence that economic growth may have led us to ignore other values of life
critical to human well-being. (The Happy Planet Index 2.0, by The New Economics Foundation 2009. and Stiglitz sen
Fitoussi 2009 p 2.)

In order to maintain growth, western and western influenced capitalist economies have a
structural need to sustain demand for consumption one way or another. This means that western
style capitalism needs growth for the sake of growth. This is where the indicator in use, the
Gross Domestic Product, turns also into its value and its own policy. But this feature sets it at
odds with a widely noted fact about human nature – that once our basic material needs are
comfortably met, more consumption tends to make little or no positive difference to our well-
being and therefore happiness. In social sciences this effect has a name of “hedonic treadmill”
and is also understood by Abraham Maslow.

“Internal causes produce individual differences in life satisfaction in the absence of variability
in life circumstances. For example, two individuals with the same income may have different
levels of income satisfaction. Internal determinants can also produce the same level of life
satisfaction in individuals with different life circumstances. For example, two individuals with
different levels of income may have the same level of satisfaction with income.”
(The Happy Planet Index 2.0, by The New Economics Foundation 2009.)

Internal causes are referred here as individual values, while external causes are referred as
policies. Conclusively, identified advantages and issues of pure GDP measurement in economics
present via the values and policies it represents, when considering human happiness and well-
being, can be defined as follows; It does not consciously measure amounts of what is
prerequisite, or resources, for consumption, nor the reason for, or the result of consumption. It

14
does not identify quality of resources used or quality of what is being consumed, and it aims
focus to consider mostly physical and material growth with the help of mental aspects.

Indicator: the Gross Domestic Product

Policies: physical and mental growth, profit and gain from measurers perspective, adapted to the usage of
economics.

Values: physical and mental growth via profit and external gain.

It must be recognized that GDP was never meant to be in the use where it is in today’s
economical society. Nevertheless, it can be usable with full understanding of the index, and
when complemented in ways that shift it into a more balanced, proper and correct usage.
Additionally a measurement for qualitative values producing actual happiness and well-being to
individuals and therefore humanity are needed. (Stiglitz sen Fitoussi,2009 p.17.). There exists research
showing that amount of income and consumption correlates only to a certain level with
happiness and well-being. Therefore, the level of necessary GDP can be the amount of income
needed to provide for physical well-being of an individual, since this makes possible shifting
individual’s focus towards positivity on a larger scale and more freely that manifests the true
value. GDP is also recognized to be complemented with dimension of standard deviation in order
to be relevant, as the commonly used GDP per capita cannot view real income distribution.

There are several holistic indexes, a few more developed than others, measuring development
and performance leading to well-being and happiness which is viewed here in comparison with
Gross Domestic Product.

15
2.3 Genuine Progress Indicator (GPI)
“The GPI is one of the first alternatives to the GDP to be vetted by the scientific
community and used regularly by governmental and non-governmental organizations
worldwide. Redefining Progress advocates for the adoption of the GPI as a tool for
sustainable development and planning. “ (Redefining Progress 2009, http://www.rprogress.org)

The developer of the GPI, Redefining Progress, is one of the leading public policy think tanks
dedicated to smart economics located in the USA. Redefining Progress declares its purpose as to
find solutions that ensure a sustainable and equitable world for future generations. While
conventional models for economic growth discount such assets, values, as clean air, safe streets,
and cohesive communities, Redefining Progress integrates these assets into a more sustainable
economic model. Working with government and advocacy groups, Redefining Progress develops
innovative policies that aim to balance economic well-being, environmental preservation, and
social justice. Currently GPI is in some form used for example, in Canada in form of GPI
Atlantic. “Our policy initiatives address pressing environmental issues such as global climate
change and natural resource depletion, while ensuring that both the burdens and the benefits of
these policies are shared equally among affected communities. We inject ground-breaking ideas
into public dialogue, policy discourse, and decision-making in compelling and nonpartisan
ways.” (GoGreen: an ecotribe initiative)

16
 Figure 3. Graph shows how economic growth shown
by GDP per Capita seizes to reflect growth in GPI per
Capita after certain level of economic activity is
reached. The lack of correlation may be caused by
differing valuation of same attributes in both of these
indexes.

General Process Indicator uses same data as GDP, but values it differently recognizing the
direction of causal energy flow in clear situations. It also includes several additions to calculation
that is considered to show more realistic picture of the development at hand. Although many of
the additions shown are not directly measurable in monetary terms, GPI considers the monetary
amount required if an entity was hired to accomplish the aspect or task measured. GPI includes
following factors frequently presented in spreadsheet form, where from the actual GPI
measurements is calculated as follows:

+ Weighted personal consumption, (1.Personal consumption, 2.Income distribution),Value of household work and
parenting, Value of higher education, Value of volunteer work, Services of consumer durables, Services of highway
and streets,

- Costs of crime, Loss of leisure time, cost of underemployment, Cost of consumer durables, Cost of commuting, Cost of
household pollution abatement, Cost of automobile accidents, Cost of water pollution, Cost of air pollution, Cost of
noise pollution, Loss of wetlands, Loss of farmland, Loss of primary forests and damage from logging roads, Depletion
of nonrenewable energy resources, Carbon dioxide emission damage, cost of ozone depletion, Net capital investment,
Net foreign borrowing,

= GPI (GPI/capita follows).

The resulting indicators in general GPI spreadsheet is as follows; GPI indicator as calculated
above. GPI per capita, where total GPI values are divided by number of people involved. Finally,

17
GPI per capita is compared to GDP per capita from same sources as comparison of correlation
between these two indexes (Figure 3).

2.3.1 How GPI Measure Progress

The GPI starts with the same personal consumption data that the GDP is based on, but
then makes some crucial distinctions. It adjusts for factors such as income distribution,
adds factors such as the value of household and volunteer work, and subtracts factors
such as the costs of crime and pollution. Because the GDP and the GPI are both measured
in monetary terms, they can be compared on the same scale.

Interesting, but very logical aspects included in GPI measurement are for example, Income
Distribution is a central theme of GPI. Both economic theory and common sense tell us that the
poor benefit more from a given increase in their income than do the rich. Accordingly, the GPI
rises when the poor receive a larger percentage of national income, and falls when their share
decreases. Housework, Volunteering, and Higher Education is added, since much of the most
important work in society is done in household and community settings: childcare, home repairs,
volunteer work, and so on. The GDP ignores these contributions because no money changes
hands. The GPI includes the value of this work figured at the approximate cost of hiring
someone to do it. The GPI also takes into account the non-market benefits associated with a
more educated population. Crime imposes large economic costs on individuals and society in the
form of legal fees, medical expenses, damage to property, cost of added security and the like.
The GDP treats such expenses as additions to well-being. By contrast, the GPI subtracts the costs
arising from crime.

18
Resource depletion
If today’s economic activity depletes the physical resource base available for tomorrow, then it is
not creating well-being; rather, it is borrowing it from future generations. The GDP counts such
borrowing as current income, the GPI as a current cost.
Pollution
The GDP often counts pollution as a double gain: Income when it is created, and then again
when it is cleaned up. The GPI subtracts the costs of air and water pollution as measured by
actual damage to human health and the environment.
Long-Term Environmental Damage
Climate change, ozone depletion, and nuclear waste management are long-term costs arising
from the use of fossil fuels, chlorofluorocarbons, and atomic energy, respectively. These costs
are unaccounted for in commonly used economic indicators. The GPI treats consumption of
certain forms of energy and chemicals as costs. It also assigns carbon emission cost to account
for the global warming.
Changes in Leisure Time
As a nation becomes wealthier, people should have more latitude to choose between work and
free time for family or other activities. In recent years, however, the opposite has occurred. The
GDP ignores balanced time use, the GPI treats leisure time as of value.
Defensive Expenditures
The GDP counts as additions to well-being the money people spend to prevent erosion in their
quality of life or to compensate for misfortunes of various kinds, such as the medical and repair
bills, commuting costs, and household expenditures on pollution control devices. The GPI counts
such defensive expenditures as costs rather than as benefits.
Lifespan of Consumer Durables & Public Infrastructure
The GDP confuses the value provided by major consumer purchases (e.g., home appliances) with
the amount people spend to buy them. This hides the loss in well-being that results when
products wear out quickly. The GPI treats the money spent on capital items as a cost, and the
value of the service they provide year after year as a benefit. This applies both to private capital

19
items and to public infrastructure, such as highways.
Dependence on Foreign Assets
If a nation allows its capital stock to decline, or if it finances consumption out of borrowed
capital, it is living beyond its means. “The GPI counts net additions to the capital stock as
contributions to well-being, and treats money borrowed from abroad as reductions. If the
borrowed money is used for investment, the negative effects are canceled out. But if the
borrowed money is used to finance consumption, the GPI declines.” (GPI Report 2006, by Redefining
Progress.)

GPI shows similar idea as Gross National Happiness –principle, described next, by
acknowledging clear interconnectedness and correlation due to the clear cause-effect –relations.
Also, from every measurement noted in this paper, GPI is the only one including the very
important aspect of volunteer work into the calculations and therefore the quality of energy flow
in work. It recognizes interactive social matrices formed by individuals by their freedom of
choice in the form of neighborhoods and communities. As said in GPI, “Whether each additional
lawyer, broker, or advertising account executive represents a net gain for the nation is arguable.
But there is little questioning that workers in the underserved community and volunteer sectors –
the churches and synagogues, civic associations and informal neighborly efforts – are doing
work that is desperately needed”. GPI measures volunteer work by first estimating the total
number of hours volunteered each year from data which is gathered via external surveys. Yearly
estimation received from data is transformed from time measurement into monetary sum, rated
by standards of independent sector (15,68 USD per hour, 2006). Therefore value of volunteer
activities in US stood $131 billion in 2004, which is $447 per capita. Same measurement carried
from the year 1950 is $202 per capita, pointing clearly the direction of time usage by people
observed. The Genuine Progress Indicator and its variants were conceived as a way to measure
changes in national economic with a single aggregate scale. GPI considers households as the
basic building blocks of national welfare and thus focuses its measurements towards personal
consumption patterns and in clear situations adds positive and negative effects the total of
consumption or work done that rises from economic, social and environmental domains. Even
20
though there are issues related to its ability to measure sustainable welfare as well towards its
methodological soundness, GPI can measure and combine rarely measured aspects with account
data going back 54 years making it usable utility to many researchers around. As in other
measurement indexes, interconnectedness of both the negative and positive aspects makes it
difficult to value them accurately, although GPI identifies many important of these with success.

“'Volunteering makes the heart grow stronger,' said David Eisner, CEO of the Corporation.
'More than 61 million Americans volunteer to improve conditions for people in need and to
unselfishly give of themselves. While the motivation is altruistic, it is gratifying to learn that
their efforts are returning considerable health benefits.'" (World Volunteer Web, 2010)

Indicator: the Genuine Progress Indicator

Policies: Development in a cause-effect relationship, direction of energy flow manifesting as positive or negative
in relation to well-being and measured in, and converted to, monetary terms.

Values: Quality of energy resources, its transformation to, and results produced, by positive and negative
relationships. Actions positive to oneself sometimes negative in the long run and in larger proportional
picture, due to interconnectedness.

GPI calculated for Finland, according to which growth in economics has not correlated with growth in well-
being since 1980's. (Tilastokeskus-website, 2010)

21
2.4 Gross National Happiness (GNH)
One, maybe most interesting of the balancing indicators to Gross Domestic Product
comes from a small, still quite isolated Buddhist country of Bhutan. Bhutan has based its
developmental policies on indicators known collectively as Gross National Happiness
(GNH), which represents more holistic, spiritual and philosophical view of development
due to its background. Similar to some extent with more western concept of the green
economics. Bhutan has recognized that without a common vision, or value, founded
through indicators of GNH, each individual merely looks to his or her own ends even
though welfare is a shared pursuit. Therefore GNH index aims not only to assist building
and maintaining this vision and foundation of happiness, but is also a necessary tool for
government to protect its cultural- and natural- environmental-, and spiritual heritage.
With these aspects as tools, main goal of species wide happiness and understanding of
universal interdependence becomes reachable for individuals according to GNH.(Nation
Master -statistics, 2011)

GNH consists of a matrix model, where chosen indicators related to processes or policies at hand
are defined and their effect is considered together with the values commonly shared in Bhutan.
GNH is not a simple formula, but a collection of interrelated and qualitative variables and survey
data that aim to provide a perspective broad as possible towards situation it is used in. In order to
qualify valid, an indicator with respect to any variable has to have either a positive or a negative
influence on well-being and happiness. The direction of causality towards happiness and well-
being must be clear. For examples, more lawfulness, more health, and more clean air have a
more positive influence on happiness than more crime, illness, and pollution.

Besides objective causality in describing these interdependent relationships, addition of

completive open self-reporting of experiences provides more accurate picture of well-being. The
interdependence of all things, instead of divisive abstractive versus conventional and subjective
versus objective is a key concept in GNH. For GNH indicators, this cultural concept means that

22
seeing everything as relational to everything is more useful than seeing everything as separate
from everything.
GNH consists of several provisional domains that make up the survey on national level. These
are psychological well-being, which consists of contentment, life satisfaction and health of the
mind. Domain of health focuses on the physical aspects of health regarding whole population.
Time use shows the ratio between different time usages from work to leisure time, socialization
and rest. It identifies the importance of balance in time usage. Domain of education focuses
mainly on participation, skills and educational support among other aspects. Cultural domain
consists of both diversity, as well as tradition. Both are recognized as important factors to be
maintained. Domain of good governance evaluates how people perceive various governmental
functions in terms of efficiency, honesty and quality. Domain of community vitality focuses on
relations and interaction between communities in different dimensions from families to larger
communities. Domain of living standard aims to represent basic economical living standards of
citizens of Bhutan. (Professor Karma Ura, WHO 2008)

“The GNH screening tools can be applied in two dimensions, at the project level and the policy
level. It has been designed to scrutinize projects and policies to be implemented at three levels:
those meant for all ministries and sectors, for respective ministries (health, education), and for
individual sectors (youth employment).” (Bridge to Bhutan -website 2011)

The whole process of GNH after initial data collection is demonstrated in appendix for the
purpose of illustrating both, its mathematical and scientific soundness, and resulting complexity.
(Appendix 1.)

+Without a possibility to give an honest opinion of its functioning in mediating the values to real
life policies in Bhutan, the important aspects related to Gross National Happiness–index are its
spiritual and altruistic perspective towards these values that roots itself into Bhutanese Buddhist
culture, stating the core meaning of interdependence and balance. Recognition that subjective
and objective, therefore the values and policies, and happiness and well-being, are interrelated.

23
(Professor Karma Ura, WHO 2008). Even though it includes several other views embedded that differs
GNH from other perspectives, the main reason what makes GNH important is its focus on which
is central to the measurement itself, the values. GNH states that the perception of happiness that
doesn’t take into account the needs of others’ happiness is considered irresponsible and
egocentric and the pursuit of such happiness is likely to be, not only unethical, but unsustainable
in larger societal perspective of living. Equity is also one important aspect commonly recognized
that also GNH views of importance. According to GNH, happiness blossoms through enhanced
relationships, and is arising unbidden when relationships improve. In this sense, the whole of
development is a progress in relationships and not of individuals alone, and is also visible with
the relationship between values and policies mediated by the indicators itself.

- Challenge in conducting GNH surveys is the volume of questions and the time taken for
individual interviews. In initial surveys, enumerators can take more than six hours to interview
one respondent. This complexity is reflected in GNH matrix formation as well. GNH also has,
due to its mostly qualitative nature, very high diversification of variables used. Therefore instead
of clear standardization model, it is made of framework that is modified according to situation at
hand. This flexibility can also be considered as a positive asset that broadens its usability. At the
moment statistics show that Bhutan is close to sustainability considering the effects on
environment (forests, water and clean air). With possible help from western type of advanced
technology, the country could rise above many standards of material well-being that can be seen
as a prerequisite for happiness as well as well-being in larger scale. Before this improvement, the
effects of GNH principle are reduced (Nation Master -statistics 2011) if considered what it could be with
new sustainable energy sources.

24
“In recent years, researchers from several disciplines have begun investigating the benefits of
contact with plants, especially trees. In studies of the stress-reducing effects of nature, people
recovered more quickly and completely from stress when exposed to plant-rich natural settings,
as indicated by lowered blood pressure, heart rate, muscle tension and skin conductance.”
(Conductance measurement is considered one of the best physiological measures of autonomic nervous system and stress
response). (Dr. David Hoffmann, PhD 2003)

Indicator: The Gross National Happiness

Policies: Soundness of rational scientific methodology supported by subjective values. Actions that lead to
positive effect for everyone supported.

Values: Quality of Interdependence, of individual and policies of whole. Common values, vision, reflecting to
means and to an end. Cause-effect relation with recognition of positive and negative effect towards the
interconnectedness.

2.5 The Happy Planet Index (HPI)

Happy Planet Index is a measurement index developed by an independent think tank, The
New Economics Foundation (referred as NEF). It aims to focus on measuring qualities of
what truly matters in relation to our well-being in terms of long, happy and meaningful
life and reflects it to our relationship with our planet and the consumption of its
resources. These are also the values it represents. HPI aims to be the ultimate efficiency
ratio aiming to provide information needed in order to shift development into more
sustainable direction. NEF has been awarded by the International Society for Quality-of-
life Studies’ award for the betterment of human condition 2007, for development of HPI.

25
 “New Economic Foundation considers its aim to improve quality of life by promoting innovative solutions that
challenge mainstream thinking on economic, environment and social issues by working in partnerships and putting
people first. NEF was founded in 1986 by the leaders of The Other Economic Summit (TOES) which forced issues
such as international debt onto the agenda of the G7 and G8 summits. NEF aims to combine rigorous analysis and
policy debate with practical solutions on the ground, often run and designed with the help of local people. As HPI
shows, NEF creates new ways of measuring progress towards increased well-being and environmental sustainability.”
(The Happy Planet Index 2.0, by The New Economics Foundation 2006)

“NEF works with all sections of society in the UK and internationally - civil society, government,
individuals, businesses and academia - to create more understanding and strategies for change.”
(The Happy Planet Index 2.0, by The New Economics Foundation 2006)

Happy Planet Index was launched in July 2006 with a purpose of offering alternative to the
seemingly economic obsession with GDP. HPI identifies its values more accurately as health and
positive experience of life, forming positive emotions, and the natural resources that human
existence is physically dependent on. The goal, the policy of HPI, can be defined as a happiness
that does not cost the Earth, and is measuring progress towards this target with both, statistical
data and empirical studying. The most important findings provided by the second HPI indexing
are: more what is often thought as development and consumption rarely means more happiness
and well-being, and countries with same ecological footprint, meaning usage of planetary
resources, support lives with differing levels of well-being and happiness.

Also it is important to mention that no country currently achieves three accurate goals given by
HPI; high life satisfaction, high life expectancy and one-planet living.

HPI equation in its simplified form is

26
 2.5.1 How HPI measures development
This measurement is composed from statistical data gathered from various sources, as
well as empirical survey provided by people living in countries included in it's
measurements. Life expectancy statistics are provided by Human Development Index
report (UNDP 2007), whereas life satisfaction is measured by numeric scale questionnaires
provided by NEF and external sources such as World Values Survey, discussed before.
This is in order to provide broader view with differing samples. Third part of
measurement, the ecological footprint, is based on data provided by WWF's living planet
-report 2008. Ecological footprint compares the biocapacity available as resources and
absorbing products with the rate it is produced, for example via greenhouse gases. Since
this data covers only some countries in measurements, different variables have been used
in stepwise linear regression to provide comparable information. These variables include
per capita CO2 emissions and GDP growth. Other affecting variables noted include
growth of industrial sector, population density and level of urbanization.

“Economic development needs to be decoupled from environmental impact and, perhaps more importantly, well-
being needs to be further decoupled from economic development.”
(The Happy Planet Index 2.0, by The New Economics Foundation. 2006)

+HPI index provides valuable information regarding sustainable, balanced development in

physical and mental aspects. Important aspect regarding HPI, besides its simplicity, is its
emphasis on ecological perspective and the relation it has with subjective well-being. Where for
example GDP focuses on final products in form of physical products and intangible services,
HPI focuses consciously on resources that are behind both segments and which provide energy
needed for positive action and -result in general. As HPI shows, high subjective well-being and
perceived happiness is rarely related to high consumption. This is well seen in difference
between USA and Costa Rica, where people in latter live longer and tend to report being happier
with ecological footprint that is a quarter of the USA's.

27
- Even though its name, how HPI actually successes in measuring happiness, besides the ratio
between well-being and planet Earth is not certain. This is of course understandable due to the
subjective nature of happiness and broadness of the values aimed to be carried into policies.
Although it is clear that external prerequisites for potential happiness might be better met where
longer living years can be sustained, HPI simplifies from other happiness and freedom providing
value variables. These include political freedom, general human rights and labor conditions.
Also, the data provided by World Values Survey is rarely conducted, being measured in five year
intervals and to be broad for truly measuring happiness reliably. (http://www.worldvaluessurvey.org/)

Index: The Happy Planet Index

Policies: Healthy life years in relation to sustainable living towards planet and balanced with the whole.

Values: Happy life years, interconnectedness; humans and planet earth, actions that lead well-being of whole.

Figure 4. Sshows year 2005 co2 emissions to GDP per capita –ratio in different regions. http://www.gapminder.org (1

Costa Rica GDP per capita 11,500$, USA 46,900$ 2008 estimate, CIA –world fact book)

28
2.6 Greenhouse Developmental Rights (GDR)
The Greenhouse Developmental Rights framework is aimed to bring one answer to
increasing global climate issue and developmental issues together. It was developed
together by Heinrich Böll Foundation and Stockholm Environment Institute from the
climate protection agenda laid by United Nations. GDR framework operates in very
ambitious context of lowering climate warming and emissions leading to it in global
level, while still making possible for less developed countries to pursuit constructive
development towards well-being in material perspective, where necessary. This minimum
level of well-being is described inside the framework as the development threshold,
which is defined above global poverty level. GDR also takes intranational income
disparities formally into account, instead of common national per capita averages.

According to GDR, by holding clear “350 –line” in unit for carbon dioxide emissions as a value,
and therefore holding global temperature rise in 2 degrees Celsius, development towards policy
of well-being can be attained together. It lays out strategies in order to achieve this, and also
description to dialect between countries of geographic north and south, how these two emission
producers identified could harmonize their development, as well as efforts towards minimizing
emissions. The issue described by GDR is the relationship between this development and CO2
emissions resulting when it is pursued.
One main point in the GDR framework is defined as the development threshold. It takes
perspective that physical development should be aimed not only to gain freedom from poverty,
but to achieve dignified and sustainable ways of life in a global perspective. GDR development
threshold is a level of welfare below which people are not expected to share the costs of the
climate transition responsibility. This means level above basic needs, but well short of today’s
levels “affluent” consumption. According to the GDR -report, approximately 70 percent of the
population that lives below the development threshold is responsible for only approximately 15

29
percent of all cumulative emissions. The actual level of the development threshold differs in
global perspective and between countries with subjective variation, especially when presented in
clear monetary terms. GDR uses example amount of approximately 20$ per day per person or
equivalent in its calculations.
Key themes, values and policies in GDR, are capacity and responsibility. Effort share based on
these principles is common, sound and ethically reasonable method. Capacity quantified in
GDR is done in a manner that accounts for intranational disparities in income in respect to above
explained development threshold. Example of this can be seen considering what GDR defines as
key countries, USA, China and India, in chart below, where capacity above development
threshold is visible in green color and yellow under it (Figure 4.).(GDR framework 2009)

Responsibility according to GDR is defined by cumulative CO2 –emissions from fossil fuel
consumption since 1990, although it is recognized that there is several “correct” definitions for
this. The year 1990 is considered reasonable one, largely because earlier emissions were usually
(though not always) made in ignorance of the harms they were causing. By the metric
responsibility is higher in wealthy countries and effectively zero in the poorest countries. As a
contrast for high capacity and responsibility countries such as USA, countries with high
emissions such as China and India have relatively low responsibility.

30
 2.6.1 How GDR measures development

There are many formulas which have properties needed in GDR framework, but one
mostly used is the one that defines a simple weighted sum of responsibility and capacity,
and also allows different weights to be given to each: RCI = a R + b C
The capacity „C‟ of a country is the sum of all individual incomes above the development threshold. For example, let’s
assume that in a country 10 per cent people have yearly incomes above US $9,000. In that case, the individual incomes
of this group above the threshold are added up to arrive at the country’s capacity index.
Responsibility index „R‟ is calculated as the total of a country’s cumulative per capita CO2 emissions from fossil fuel
consumption since 1990, above the developmental threshold.
The result, “RCI”, comes from Responsibility/Capability Indicator.

GDR specifies that A. and B. sum to 1, so that as the paired weights go from A =1 and B = 0 at
one extreme, A=0 and B=1 at the other, the RCI goes from being exactly equal to
responsibility(R) to being exactly equal to capacity(C).

GRD framework suggests that obligations would presumably be passed down to individual level
from national level, another level of “c” and “r”. Finally the aim of GDR is to be able to built a
framework upon the principles of common but differentiated responsibilities and respective
capabilities. What is notable to acknowledge is that “costs” cumulating from emissions should
be seen as future investments or opportunities.

+GDR framework is scientifically well constructed for its measuring purpose. Even though the
relation of man made CO2 emissions to climate change is still controversial when different
researches and values, for example behind carbon trade, are observed. For the financial profit
making motives of the participants seem to go in front of the actual purpose of environmental
protection as a policy intented in carbon trade. One resulting example of the policy reflecting
these values can be seen in form of the so-called geoengineering-programs. However, besides
reasonable development threshold perspective, GDR framework consists valuable directions and
guidelines to cross-country co-operation and interaction towards sustainability. These parties are
defined as North and South. According to GDR framework, the North in particular has work to

31
do to convince the world that it is willing to engage seriously in a global effort to protect the
climate by demonstrating its readiness to reduce its domestic emissions and therefore engage
positively towards the stabilization of the climate. Until now, northern countries have been
capable only to partially engage in meeting commitments done in, for example Kyoto or Rio.
North also must agree to, and begin to deliver, the technological and financial support needed to
accelerate mitigation in developing countries. This can enable the South to launch its own
transition into low-carbon development path according to agreements done and grow positively.

GDR sees the main challenge of the North, what it defines as many broken promises towards the
South in the past, and is expected to take the lead in new trust building process to make up for its
responsibilities towards the South. This requires at least transparent and equally fair and honest
procedures.

The South, too, is hoped to act dramatically to overcome this international lack of trust
recognized. It is appropriate for South to act voluntarily for trust-building period to become
successful. It is necessary that South starts to operate towards this positive development on its
own, as well with real effort and be willing and open to contract with North when equal, honest,
and fair commitment is presented. Perhaps even to engage further than these commitments
require in friendly way to show solidarity and forgiveness. Prominent examples regarding this
can be seen in South Africa’s commitment to drive towards an emissions peak by 2025 (Earthlife
Africa Jhb -websource), by Indonesia 25% reduction (Springerlinks publication -websource) and South Korea's
announcement to support long-term goal of cutting emissions aggressively (Bloomberg 2009).
Finally, GDR report says that the South should demonstrate that it is serious in its desire to
prioritize in eradication of poverty and building sustainable human development in a positive
way instead of previous happenings regarding the development.

32
Indicator: The Greenhouse developmental Rights

Policies: Shared responsibilities and capabilities towards development via transparent dialogue. Balanced
development, sustained to 350 line of carbon emissions.

Values: Common responsibility according to capability. Teamwork and relationship via trust and openness.
Keeping planet Earth physically inhabitable to humans.

2.7 Other notable sources

2.7.1 Facebook Global Happiness Index

A Facebook researchers group have recently presented what is called “the new Facebook
Global Happiness Index” for the US and other English speaking countries. It is based on
collected data from the mentioned social media network site for two years, being mostly
what is called "status updates", of 100 million users. “Status or mood updates are small
fields were users can easily inform the community about what they are doing or how they
feel.”

“According to this index Americans tend to be happy on holidays, such as Christmas or

Thanksgiving, and Fridays. They are considerably sadder on Mondays and when celebrities, for
example Michael Jackson, die.” (FGHI -team). However, the researchers responsible for this
index agree that status updates via Facebook might be used for communicating with others rather
than expressing personal feelings truthfully and intentionally. Facebook ”global happiness
index” represents approach very similar to GDP, with very similar challenges: quantitativeness
instead of reliable qualitative perspective, and it is actually a measurement based on results of
externally visible (previous) policies without any actual reliable values behind it. Therefore it

33
also shows how social media might actually connect humans reliably only in quantitative
dimension instead of any relevant qualitative dimension. The Facebook happiness index,
similarly to the Gross Domestic Product, is therefore not able to distinct, for example, love from
apathy or well-being from sorrow, and is irrelevant measurement of what its name suggests or
anything thereof.

Index: Facebook global happiness index

values: Percieved happiness externally determined

policies: happiness as externally measured quantity

2.7.2 Comparison with Maslow’s hierarchy of needs

Views to holistic measurements, and more importantly ways to connect existing ones in a
positive way, can be found in different branches of psychology and philosophy, with high
support from biology and especially spirituality. Somewhat fulfilling roles of individual
emphasis of GDP and fellowship emphasis from GNH can best be seen when comparing
their views and valuation with a commonly accepted theory. One example is the
hierarchy of psychological needs by Abraham Maslow, and theory developed from it by
Clayton Alderfer, called the ERG theory.

These focus not only on these needs, but also positive traits and their manifestations from step to
step. It must be understood that Maslow's theory is to be viewed as individuals projecting these
needs, negative values, and positive values manifesting to whole, and cannot be affected by
policies of governing legislations regardless of the individual him, or herself. Therefore external
policies cannot fundamentally affect the values or needs of individuals. Maslow’s hierarchy also
states that in order to achieve higher levels of this hierarchy, it is necessary to ensure fulfillment

34
of the needs providing basics for well-being. Maslow defines these needs together as
physiological- and safety needs, which include basic resources for physical human living. It also
shows that values above these can best be fulfilled outside the spectrum of financial activity and
perhaps even the material dimension. It is also clear that ultimately Maslow's hierarchy reflects
only what Abraham Maslow himself has identified as needs, and cannot be stated to have
absolute validity or reliability to humans in general.

Indicator: Abraham Maslows hierarchy of needs

Policies: Fulfillment via elimination of needs identified to be adverse to well-being and

happiness

Values: Needs identified. Elimination of needs, for example via fulfillment.

Figure 5. Above shows the relationship between individual development as seen by Abraham Maslow and possible
paradigm change from individual to more holistic and socially altruistic, in order for it to be sustainable and ethical
considering the whole: When individual development reaches higher, increases therefore the possibility, and necessity,
for socially altruistic behavior inversely. That is actually the middle levels of love and belonging of the pyramid,
resembling the idea of the golden rule.

35
The first two steps of the pyramid are levels that factors outside individual, such as governmental
institutions, can positively affect. According to Maslow, satisfied individual physiological and
safety needs are therefore prerequisite for fulfillment of upper needs to be possible to emerge.
This can be applied relatively when global macro –level is considered, and is focus of every
measurement index presented in this paper. The GDR -framework is clearly focused towards the
first step, but includes principles with further measurement adaptability. Similarly, the Happy
Planet Index is affecting these first steps with measurement focus towards the steps above these.
The next two steps, according to Maslow and what he describes in turquoise and purple, start to
emerge more freely when individual physiological and safety needs are well enough met, or fear
of these are reduced. These middle levels of love and belonging, and esteem, can be seen as a
turning point where individuals focus may, and usually does, shift from the first basic needs
focusing on individual self towards needs for community and relationships around them.

The most important levels of love and belonging, which produce esteem and actual happiness,
can best be met by voluntary and equal interaction. This more balanced focus allows also the
defensive approach and pressure towards bottom levels of the pyramid to ease. It is also clear,
that from these levels of love and belonging sprouts fulfillment to every other step described in
the Maslow's pyramid, being the actual need behind all of these.
Capstone of the Maslow’s pyramid, which he defines as level of indigo, is viewed as a goal of
the individual development. This can be reached sustainably and permanently with relative ease,
with well-functioning lower levels which require functions as individual as well as community,
or as a whole. Indigo level of self-actualization is reached by adjusting individual’s personal
needs to the needs of relationships and the whole in order to achieve sustainable balance in
subjective and objective, between individualism and fellowship. The level of self-actualization
can also be achieved via economics by accumulation of material wealth so large that it does not
offer anything, or any fulfillment anymore. For it has so exceedingly fulfilled its usable purpose
of building the first two levels presented in Maslow's pyramid. Therefore there is no other
direction to go than holistic spiritual. Often it seems that people with this accumulation, due to
the nature of economy, stay in the material egoistic pursuit for they have been required to work
36
and act in ways that take them more far away from the altruistic, emotional and therefore purely
spiritual. Current usage of the GDP measurement can assist in every step of Maslows hierarchy,
with the exception of the most important step to happiness, of love and belonging. This is
supported by both Maslow and Alderfer, and is also visible in effect called the hedonist
treadmill.

“Alderfer also proposed a regression theory to go along with the ERG theory. He said that when
needs in a higher category are not met then individuals redouble the efforts invested in a lower
category need. For example if self-actualization or self-esteem is not met then individuals will
invest more effort in the relatedness category in the hopes of achieving the higher need.”(Principles
of management, Carpenter, Bauer, Erdogan. 2009.)

Therefore in order for this hierarchy to be sustainable and balanced, as according to the above
picture, the most important step is what is called the level of love and belonging for it enables
that overall sustainability by taking pressure from steps before it by reducing fear, and providing
for the healthy development of the steps above it. Support of this step is the main focus in
measurement indexes Gross National Happiness and the Genuine Progress Indicator, although
attention is set towards every other step as well.

“In today's materialistic society, if you have money and power, you seem to have many friends.
But they are not friends of yours; they are the friends of your money and power. When you lose
your wealth and influence, you will find it very difficult to track these people down.” (His Holiness
the Dalai Lama)

Like mentioned, institutions such as government or companies via commercial activity, can have
clear positive effect only on the first two levels of Maslow’s hierarchy providing the
prerequisites for the possibility of reaching higher levels in a sustainable and responsible way.
Purpose of making this possible can be seen as a natural purpose of every measurement index
compared in this paper; for due to the nature of the measurement goals and values, there are
objective views above self-interests involved providing level of trustworthiness.

37
3. Comparative Study of measures of well-being and development
The reason for conducting a comparative study on these specimens is the similarity they
share in some respects, and differing viewpoints in others, both of which become under
focus in this case. These measurements ultimately all grow from the same need and
understanding of values, which since realized in various locations, cultures and by
diversified individuals, follow diverse methodological paths towards the same and
common policy of hope, species wide happiness and well-being with the help of
economic development. Simplified, every measure compared with GDP stems from the
same reason: the understanding that current economic development is destructive, and it
needs something to balance, that can help reach that goal of happiness and well-being in
global development.

The goal is clearly to find a corrective perspective related to development by shifting focus on
well-being and happiness providing meaningful individual development in a sustainable way via
common values that in NEF’s words “do not cost the planet”. Comparative study is also relevant
since the amount of indexes is few so all of them can be conclusively identified and studied,
individually and together.

3.1 Descriptive comparison

The specimen, being the measurement indexes, is described here with the conclusions of
the strengths and weaknesses drawn from them presented here for the analysis purpose.
Strengths and weaknesses identified include both, from external opinion visible in all
sources listed as well as interpreted by writer personally, and are combination of values
and policies mediated via indicator. For the indicators competitive, there are no threats or
opportunities involved. After first figure there is specifications of every measurement
index presented.

38
 Table 1. Strenghts and weaknesses of measurement indexes

Attribute / Strengths
Index Weaknesses
+ measures material and mental growth effectively - oversimplified and narrow
-+measures consumption of material and mental resources spectrum of growth,
- complete lack of qualitative
GDP dimension of reason and result
(The Gross (-wellbeing of economy, not
Domestic Product) wellbeing of human beings.)
GPI + identifies aspects of growth outside economics
+ identifies direction of qualitative energy flow and interconnectedness of
(Genuine Progress aspects. - simplifications for complexity of
Indicator) topic
GNH +identifies broader wellbeing with economics only as possible means,+ recognition of
relationships, interconnectedness and balance. - complex methodology and
(The Gross + qualitative preferred instead of quantitative. subjective surveys
National + flexible. - low quantitative standardization,
Happiness) - flexible.
+ simplicity,
HPI + ecological focus towards resources, - oversimplifications,
(The Happy Planet + subjective qualitative aspect. - incomplete source data for its
Index) + balance in development. purpose.
GDR + methodologically simple and sound for its purpose,
+ recognition of interconnectedness and dialogue - measures narrowly anything but
(The Greenhouse + capabilities and responsibilities of parties interrelate. climate,
Developmental - does not identify clearly reason or
Rights) results.
Table 2. Descriptive comparison of Indexes

Attribute / Index GDP GPI GNH GDR HPI

Year developed 1995
Approx.1934 Approx.1972 2008 2006
Redefining Progress SEInstitute / New economics
Developers Simon Kuznets* ** King of Bhutan HBFoundation** foundation**
Location where USA

developed USA/Pennsylvania Bhutan Scandinavia/Europe UK / Europe

Usable data 1950

available from Early 1930’s 1972 1990 2007

To 2004 (today)
today 2006 (today) 2030 (speculation) 2009

Possibility to Global Not defined (global

implement Global only) Global (only) Global
Methodology
-Calculation /
formula X X X X
-Matrix/framework X X X
-Empirical X X
*Simon Kuznets can be credited developing GNP, from which GDP has evolved. **Mark implicates (independent) think tank

39
 Table 2. continues

Attribute / Index GDP GPI GNH GDR HPI

Qualitative X X X X
Resources X X
Final goods X X
Quantitative X X X X X
Resources X X X X
final goods X X

Objective well
being
Economy X X* X X X
Ecology/nature X* X X X

Holistic recognition X* X
subjective well
being X X*
*These aspects are noted, but only partial.

With the comparisons shown above, GNH and the GPI have most holistic spectrum and
value elements from the measurements included here. From the similarity between these
two, although sprouting from completely different backgrounds, a connection between
values can be found. Clear examples of this are the focus of actual quality, or qualitative
approach, to values and interconnectedness of individual persons and aspects making the
whole in relationships. Although the rest of the measurements seem more directly
focused on their special focal point, this focusing gives definitely more accuracy into
analysis in their special context and measurement purpose than two previously mentioned
indexes.

40
4. Results and discussion

Figure 6.Many different, still the same. The paradox of GDP and GNH

Although there exists common nominators and themes in goals of the indexes viewed, equally
important aspect is to consider the ways they differ and can therefore complement each other
when ideas and elements are combined and viewed, or used, together. For they all share the
purpose of reaching the goal of species wide well-being and happiness and are therefore not
competing. Instead of policy of mere quantitative focus towards the end products and
consumption of resources, the values, focus needs to be set qualitatively towards these same
phases of process. Start and the result of it. Each of the aspects, values, important to development
is present in these indexes together and it is interesting to see how diversified world views affect
the composition of these measurements. For they share similar values underneath this
diversification. This is best seen in between index of GPI compared to GNH that have
differences at least in cultural and geographical background, as well as political stand point and
spiritual perspective, but share similar values.

Main difference between GDP and other measurement indexes compared here are different
values. Latter focuses the policy of profit and positive effect to a larger spectrum than measurer
itself, and recognizes positive effect much broader than, and not always correlating with,
financial profit.

41
Similarly to Maslow's hierarchy of needs, GDP measures values and resources inversely and has
therefore values only of itself. This means that it has no values embedded besides sustenance of
economics, corporations within it, and the Central banking-system on top, which in this current
structure is growth. Growth is defined via profit, and the profit for central banks occurs via
interests and other service costs keeping it relevant. Central bank being, monopolistic, globally
oligopolistic closed economy on top of the visible economics, where the visible economics are
its forced profitable customer.

Figure 7. Shows
results concluded
in visible form.
Policies from
Gross domestic
product and
values it is based
on.

Figure 7.
Policies from
comparable
measurement
indexes and
values it is
based on

42
Other measurements have values from humanity outside the scope of measurer itself, this means
that these values aim to sustenance of humans and not economics for the sake of itself. Together
all these values embody the so-called Golden rule, which is in the same time the connecting
factor behind the spiritual and ethical inheritance between the geographical areas where from
these measurements sprout alive, and is shown later in this paper.

Clear trend is that recognition of our relations, interconnectedness, and our global existence is
not well sustained by values operating in current economic development. From these
measurements can be seen that policy of more holistic quality, which can balance development
towards well-being, is needed and welcomed. For this will reflect from individual human level as
well as to whole humanity on planet Earth. On the other hand, sovereign self-responsibility
visible in western capitalism is welcomed complementation in eastern focus of GNH to balance
the parental role between society and individual as much as broader holistic understanding
represented by GNH is needed to wake individuals from “GDP –tunnel vision” of separateness.
This has manifested itself, for example in the form of central banking-system and banking sector
that operates within the law-structure of corporation, and therefore forces economic growth on
interrelated public and private sector same way to GDP with motives to profit and growth.

Without quality recognized, it is possible to measure what well-being and happiness is presumed
to be, instead of well-being and happiness itself, or to whom, quantitatively. When GDP is an
indicator, or value itself, it has only quantitative dimension. Therefore as long as GDP is
followed in any interaction activity of humans, including economics, it will reduce unavoidably
the overall human wellbeing and happiness in global scale. This cannot be changed via
government policies or regulations, beyond lowering the thresholds meaning change within these
institutions, for otherwise this can lead to tyranny.

“That government is best which governs least.” (Thomas Jefferson)

43
 “It became clear during our discussion that the main cause of depression was not a lack of
material necessities but a deprivation of the affection of the others.”
(His holiness the Dalai Lama.)

4.1 Idea with development threshold and standard deviation

Top 1% owns more than 90% of US combined. “(Working Group on Extreme Inequality)

“Highest 10% 34.7% of income or consumption“ (Nationsencyclopedia Costa Rica 1996)

Besides lack of true values, lack of standard deviation is a large deficit in Gross Domestic
Product, as is concluded in the report conducted by professor Stiglitz and his commission, and
also visible in above links provided.

GDR -framework innovates a level called the development threshold presented with GDR itself.
GPI -indicator views a correlation line, which shows correlation between well-being and income
only to some extent, by correlating the gross domestic product with genuine progress indicator
itself.

Therefore it could be suggested that when standard deviation for GDP per capita (sometimes
known as GINI co-efficient) is calculated, aim would be to view it in comparison with reference
where the standard deviation of income is the amount between the predefined development
threshold and the income/happiness -“correlation line” at most, with possible help from the
approach of GNH. Focus on this goal as a reference instead of policy in nation and global level
by freewill of individuals, could affect persons economical decision making towards more
holistic well-being presenting to some extent values found in measurements above. This effects
what can be seen in two first parts of Maslow’s hierarchy of needs. In this sense, standard
deviation connected to development measuring would be optimal when being between these two

44
threshold ideas, similar of GDR -framework's development threshold, and GPI's
income/happiness correlation, both varying on diversified factors in the area measured.

“For since growth in GDP does not correlate with happiness after safety needs are met, it can be
said that what this economics define as profit does not bring happiness after reducing fear of
safety. For if presumed that gain of profit to oneself should bring something of value to oneself,
and therefore profit should bring happiness if that can be seen as its purpose, the definition of
profit then must be flawed.
As quote from Professor Stiqlitz in the beginning of this paper also notes, this is when profit is
taken as an indicator itself with values defined by economics, which has values (well-being of
economy) different than (values and wellbeing of) human beings. For if this does not bring
happiness, therefore more fulfilling happiness must exist. This means that there must be next
dimension of “profit” beyond mental and material, that adds to the current definition of profit.
Perhaps this can be described as spiritual “profit” that adds another level of happiness that
economics cannot give, due to the spirit countering nature of it?.”

3.2 Values common behind the measurements itself

In order to emerge relevant measurement for development, goals should reflect, or more
like support the values central to the development itself. When focusing attention to the
detail that one of these measurements, the Gross National Happiness, is consciously built
upon the spiritual and ethical values of the geographic are it is developed in, light can
be shed to the background of indicators here, for similar heritage behind other
measurements also exists. Considering the policies mediated via the measurement
indexes visible in this paper, and glimpse of the values identified behind these policies, it is also
reasonable and interesting to see do the values mediated to policies via other measurement
indexes support, and correlate with, similarly the ethical and spiritual heritage present in
45
geographical and cultural areas the same way that the GNH -indicator? Because this has effect
on the way people overall treat each other, not only in governance or business, and can help
defining the actual values operating behind the measurement indexes compared here.

Figure 8. Shows the way the different indexes are located from west to east, close to northern hemisphere. Index of GPI has been also in use to
some extent in Australia and Canada, idea of HPI also in some extent in Thailand.

The collected values from these measurement indexes and values from the spiritual and ethical
heritage in above visible areas where these are developed (Fig.8), include indirectly and directly
the same exact values mediated to policies via them. This means that policies collected from
these measurement indexes represent the same which are present in the identifiable value
systems operating behind them in the same areas. These are identified as Buddhism and
Christianity and the comparison of these are presented in appendix of this paper.

“Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves
break in and steal; but lay up for yourselves treasures in heaven, where neither moth nor rust
destroys and where thieves do not break in and steal. For where your treasure is, there your heart
will be.” (NKJW Bible Matt 6:19)

46
 Table 3. Values operating behind measurement indexes compared, (Appendix 2)

Values (spiritual heritage) Indicators (Religions) Policies (values operating

measurement indexes)

Buddhism Responsibility – capability,

Golden rule (Many, for example, Udana Interconnectedness, Actions that lead to
varga 5:18, Sutta Nipata 705, concept of positive effect for everyone,
karma and Dharma, and the noble cause-effect relationships.
eightfold path)

Golden rule (Many, for example, Christianity Happy life years, balance, profit to
oneself can be sometimes negative in
NKJV The Holy Bible, Matt. 7:12 and
larger scale, and also other way around.
Luke 6:36)

Values and policies share a common stand, all being derivations of the Golden rule. This is the basis behind the spiritual
inheritance and traditions in the same geographical areas of measurements, and also behind the policies of these same
measurements. “Do unto others as you wish them do to you”.

These are also what economists publicly want, and believe can be achieved within the economic
structure: transparency, stability, and strengthening of the financial system with resources. All of
these values are derivations of the Golden rule. More importantly, common policy and focus in
every measurement index present here emphasis the importance of relationships, within and
between people, between values and policies, and cause and effect. If not proclaiming it directly,
emphasizing it indirectly. According these indexes, relationships established according to current
economic paradigm are not working towards happiness and well-being, for this is one major
reason for their creation. It is important to understand, that relationships based on principles
encouraged by the Gross Domestic Product are almost inverse, and therefore nearly completely
opposite, to that of a Golden rule.

“The lesson in every chapter of this book is that our Gross National Happiness depends
on how we teach and live our values” (Arthur C. Brooks 2008)

47
 “I believe that the purpose of life is to be happy. From the moment of birth, every human
being wants happiness and does not want suffering.” (His Holiness the Dalai Lama)

3.2.1 Example guidelines to constructive commercial activity

“Of liberty I would say that, in the whole plenitude of its extent, it is unobstructed action
according to our will. But rightful liberty is unobstructed action according to our will
within limits drawn around us by the equal rights of others. I do not add 'within the limits
of the law,' because law is often but the tyrant's will, and always so when it violates the
right of an individual.” (Thomas Jefferson)

Without qualitative perspective, it is possible to measure only what well-being and happiness is
presumed to be, instead of well-being and happiness itself quantitatively. This cannot be changed
via external institutions, beyond lowering the thresholds via internal change that can lead to
tyranny. Therefore an example of guidelines to individual person for more constructive, although
far from perfect, commercial interaction is suggested here.

+Should not create, or invent, new threats to people and therefore cannot be a solution to threat
invented.
+Should assist and help towards positive and constructive behavior. At least lower the threshold
towards positivity in people.
+Should respect the interconnectedness and unity that exists between the people behind the
visible spectrum and forms.
+Preferably ethical, not moral. For ethical is merciful, forgiving law, whereas moral can lack that
dimension. (See the middle level in Maslow hierarchy.)
→ Does not aim focus to weaknesses of individuals and does not aim to manipulate or take
advantage of them.

48
→ Always to be voluntary, (diversity in oneness, voluntary because that oneness) -
Service oriented.

These guidelines are usable only by individual or small business entrepreneur, instead of an
institutional organization, such as government, which operates in corporate law structure and
makes this challenging. This represents possible paradigm change to make the actual positive
change.

“In general, people with greater well-being invest more hours in volunteer service work, and
volunteer work promotes positive well-being.” (Volunteer work and well-being, Journal of Health and social
behavior 2001 vol.42 (June). p.115-131)

5. Notes
“We hold these truths to be self-evident, that all men are created equal, that they are
endowed by their Creator with certain unalienable Rights, that among these are Life,
Liberty and the pursuit of Happiness.” (The Declaration of independence of the United States of America.)

Even if it the cause-effect relation for this could not be clearly defined, it seems that majority of
the people in today’s global economy is trying to pursuit happiness at the cost of liberty, or
freedom (due to the nature of money as debt, (Modern Money mechanics, by Federal Reserve), which limits
the flow of life. By focusing on the fact of reason given to us by his holiness Dalai Lama, every
human being is longing for love. That is the fundamental need from a child to adult and is also
supported via Maslow's hierarchy. Understanding of this ultimate motivation behind every
individual human brings a genuine compassion to, and towards the whole creation. By observing
the story of life and teachings of LORD Jesus Christ shown in the Holy Bible, which from
human perspective is a road of unspeakable tragic beauty,

49
compassion and love, it can be seen that everlasting happiness is something beyond material and
ultimately mental views although including steps in every element in both. Only thing we must
die for is the not-understanding of this love and compassion and accept the road and values that
are offered, for example, in the sermon on the mount into our mutual interaction. For this fulfills
the law of love beyond the seeming separation that the economy is currently based on.

“it's the economy, stupid”

(the presidential campaign of Bill Clinton 1992.)

“From my own limited experience I have found that the greatest degree of inner
tranquility comes from the development of love and compassion.”
(His Holiness the Dalai Lama)

“A new commandment I give to you, that you love one another; as I have loved you, that
you also love one another”. (NKJV the Holy Bible John 13:34)

50
 5.1 Further questions
- Since paid work seem to bring well-being to a certain point and volunteer work seem to bring
happiness /well-being after that point. Is there clear correlation between growth in volunteer
work and well-being? For voluntary working, as volunteering in general, seems to correlate with
at least the sense of happiness.

- Is there inverse correlation between growth in debt and well-being when standard deviation is
taken to calculations? When influence of temporary growth in economical work is taken into
notice, especially in long term consideration. For growth in debt, shown as growth in money
supply, requires more growth in economy. Growth in economy is currently achieved via growth
in GDP, therefore reducing the possibility, for example, to voluntary activity.

- GDP measures consumption. Consumption treats consumables as resources. Therefore GDP

also treats consumables as resources. If consumables = material resources + labor, then GDP
deducted of “energy value” of, and connected to, labor measures physical resources used,
because priceless “energy value” of innovation and inspiration is not included into the
measurement. Does therefore GDP only measure these resources instead of “growth of, and
economic well? And can growth in physical aspect of economics today be in correlation with
overall well-being of human beings? Or adverse to it?

51
List of references and appendix

References
-Professor Dasho Karma Ura and Ms Tshoki Zangmo, WHO 2008, “An approach to the
indicators of GNH”, Found at:[http://www.searo.who.int/LinkFiles/Conference_Panel-B3.pdf]
Accessed: 28.10.2010

-Professor Dasho Karma Ura, 2009 “A Proposal for GNH value education in Schools”,
Found at:[http://www.grossnationalhappiness.com/PowerPoints/value-education.pdf], Accessed:
28.10.201

-”South Korea to Cut Greenhouse Emissions 30% by 2020”, Bloomberg 17.11.2009. Found
at:[http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTCt6NfyRFDo],
Accessed: 12.5.2011

-”Bridge to Bhutan: Measuring Gross National Happiness”, Websource, Found

at:[http://www.bridgetobhutan.bt/blog/?p=687], Accessed 12.5.2011

-Tenzin Gyatso; The Fourteenth Dalai Lama, ”Compassion and the individual”
Found at: [http://www.dalailama.com/messages/compassion],Accessed: 22.10.2010

-“South Africa’s Emissions Offer”, Earthlife Africa Jhb, Press Release 10.12.2009, Found
at:[http://www.earthlife.org.za/?p=715], Accessed: 12.5.2011

-Zina O’Leary 2004, The Essential guide to doing research, Sage Publications Ltd., ISBN:0-
7619-4198-3

-Encyclopedia of the Nations: Costa Rica. Found at:

[http://www.nationsencyclopedia.com/economies/Americas/Costa-Rica-POVERTY-AND-
WEALTH.html], Accessed: 12.5.2011

52
-GoGreen: An ekotribe initiative, Found at:[http://www.go-
green.ae/greenstory_view.php?storyid=845], Accessed: 12.5.2011

-Arthur C. Brooks 2008,Gross National Happiness: Why happiness matters to America – and
how we can get more of it, Basic Books, ISBN-10: 9780465002788

-Inequality data and statistics, Found at: [http://inequality.org/inequality-data-statistics/],

Accessed: 12.5.2011

-Oliver J. Blanchard 1999, Macroeconomics, Prentice-Hall Inc., ISBN:0-13-013306

-Nation Master statistics, “Adjusted savings – Environmental statistics.” Found

at:[http://www.nationmaster.com/graph/env_adj_sav_net_for_dep_of_gni-savings-net-forest-
depletion-gni], Accessed: 12.5.2011

-Professor Joseph E. Stiglitz 2009, “Report of the commission on the measurement of economic
performance et social progress”.Columbia University, USA. Found at: [http://www.stiglitz-sen-
fitoussi.fr/documents/rapport_anglais.pdf],Accessed: 27.10.2010

-Springerlinks, “Energy use, emissions, and air pollution reduction strategies in Asia”, Found
at:[http://www.springerlink.com/content/k323685452461181/about/], Accessed: 12.5.2011

-Med Jones 2006, “The American pursuit of unhappiness – Gross National Happiness (GNH) –
A new socioeconomic Policy”,Found at:[http://www.iim-edu.org/grossnationalhappiness/],
Accessed: 12.5.2011

-The Gross National Happiness -official website, Found

at:[http://www.grossnationalhappiness.com],Accessed: 27.10.2010

-Redefining Progress 2006, “The Genuine Progress Indicator 2006: a tool for sustainable
development”, 1904 Franklin street 6th floor, Oakland CA 94612.

53
-The New Economics Foundation 2006, “The Happy Planet Index 2.0,” Found at:
[http://www.happyplanetindex.org/public-data/files/happy-planet-index-2-0.pdf],Accessed:
27.10.2010

-The Holy Bible, New King James version. 1982 Thomas Nelson, Inc. ISBN:1-58516-045-8

-Bauer,P.;Athanasiou,T.;Kartha,S. 2008, “The Right to development in a climate constrained

world: The Greenhouse developmental rights Framework.” Found at:[http://sei-
international.org/publications?pid=797], Accessed: 27.10.2010

-Tilastokeskus, GPI, Found at:[http://www.stat.fi/tup/tietotrendit/tt_07_08_gpi.html], Accessed:

12.5.2011

-UNData-web database, Found at:[http://data.un.org/Glossary.aspx?q=GDP] Accessed:12.5.2011

-Victoria's vital signs 2009, by Victoria Foundation 2009.

Found at: [http://www.victoriafoundation.bc.ca/web/vitalsigns09],Accessed: 23.10.2010

-World Volunteer Web, “Volunteering helps improve health”, Found

at:[http://www.worldvolunteerweb.org/resources/research-reports/national/doc/volunteering-
helps-improve-health.html], Accessed: 12.5.2011

Appendices
+Example of the Gross National Happiness matrix formation

+Comparison of spiritual -ethical -perspectives of geographical areas of the measurement

indexes.

+Visual map of the relation between values, measurement indexes and policies.

54
55