Economic development is a very comprehensive phenomenon and does not only take into account Gross Domestic Product but different welfare aspects or parameters too. Amartya Sen views economic development as the expansion of capabilities of the citizen.
According to him, no doubt improvements in poor people’s incomes have the capacity to increase their freedoms but increase of income alone can no way improve development prospects of the economy. Rise in income alone has at best uneven and at worst has harmful impacts on the majority of a country’s population.
Hence, we need fundamental redistributive measures for the poor in order to reap the benefits of growth and development. As far as happiness is concerned, it is a very important part of development. If a country is not happy, it may grow but not develop in a real sense. Many empirical research studies point out to the fact that wealthy economies may not necessarily be happy economies.
For measuring happiness some of the main determinants must be taken into account such as individual income, social security, family structure, relationships and children, freedom and control, religious diversity, happiness and leisure, political stability, economic stability, democracy, etc. Since, economic development cannot ignore happiness, nature and scope of economics of happiness should be understood while dealing with welfare economics.
Happiness comes from within and is something that in no way can be explained in words. It can only be felt from someone’s real expressions. On the other hand, quality of life is completeness of life. It is a more subjective and elusive term than standard of living which is merely the richness of life. Our lifestyles and preferences affect our overall quality of life and hence, vary from person to person.
The economics of happiness concerns the qualitative, quantitative, and theoretical analysis of happiness and quality of life and its related concepts affecting welfare directly or indirectly. It enquires subjective happiness-related measures and objective quality of life measures rather than just income, wealth, or profit parameters.
The economics of happiness is an approach to measure economic welfare combining the techniques normally used by economists and psychologists. It is dependent upon national as well as global welfare surveys reporting the wellbeing of hundreds of thousands of individuals across countries and continents.
Moreover, it is also based upon more advanced utility concepts than mere cardinal and ordinal utility analysis highlighting the role of factors that affect well-being of individuals. This approach is used well in areas where revealed preferences offer inadequate information, such as the welfare impact of income inequality.
It is not wrong to say that this approach provides alternative measures of well-being thereby highlighting different aspects of the economic processes that also matter to economic welfare. These aspects comprise the social insecurity caused by poverty movements, the welfare impact of effects of changes in the income and expenditure pattern over the life or distributional shifts at different levels and changes in well-being that are governed by massive rise in globalization and digitalization.
Economics of happiness should not only measure happiness aspects. While highlighting or emphasizing the multiple benefits of economic localization, the economics of happiness branch should explain clearly not only the social costs of the present day global economy but religious and ecological costs too.
Different documentaries or short films should be made showcasing the steps people should take globally to reconstruct their local economies and communities so as to make them happy. Economics of happiness is beyond what is seen and observed and it should model a happy world which at present moves all together in two opposing directions.
On one hand, authorities are in the race of promoting globalization, liberalization, and privatization together with strengthening corporate power. On another hand, there are developments of communities coming together to make more human-happy centric and sustainable economies based on a new model of economics of localization.
There is no denying the fact that economics of localization can increase productivity levels in an economy in general and industry in particular. As a result, it will boost the happiness index of economies too.
Since the late 20th century, we see the significant development of the field of economics of happiness and the main governing factors are the development of measures, methods, and surveys measuring happiness and its allied aspects. Economics of happiness and construction of various happiness indices have been described as a challenge to the theory and practice of welfare economics.
Nonetheless, promoting gross national happiness, as well as a specific happiness index to measure happiness, should be adopted candidly in the constitution of India and other democracies to correct the bad characteristics of the economy and guide its economic governance.
It is very important to understand the nature and significance of local economies or economics of localization. It will have a dual effect: On one hand, it will promote our domestic or indigenous industries and on another hand, it will promote happiness and quality of life of its people.
Dr. Binish Qadri, Assistant Professor, Department of Economics, Cluster University, Srinagar
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.