IN THE HEART OF THE GREAT DEPRESSION, economist Simon Kuznets developed Gross Domestic Product (GDP) as a standard measure of economic activity to track the economy’s recovery during that time. GDP represents the total dollar value of all goods and services produced over a specific time period. Kuznets warned the United States Congress against expecting GDP to answer the most important questions for a country, stating: “The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP.”1 GDP is an economic indicator, not a measure of national well-being.
Gross National Happiness (GNH) is one of a growing number of alternative indicators that go beyond GDP. The small nation of Bhutan developed GNH in 1972. If the goal is to measure what matters so that policy decisions are better informed, the GNH model is a powerful tool. It measures progress and directs the nation’s policy-making.2