The differences between National Income and Gross National Happiness Essay

The differences between National Income and Gross National Happiness - Essay Example This research will begin with the statement that Gross Domestic Product is a measure of the level of income yielded by an economy over a stipulated period – generally, this time period varies between one quarter and a complete year depending upon the end period when data is published by the authoritative body. It is actually an estimation of the size of the market underlying the economy on the basis of goods and services sold in it through the specific time span. This is essentially a flow measure that takes into account only productive activities through measures are adopted to avoid double counting; transfer of financial assets between hands is ignored while estimating the same. In other words, only those goods and services produced or sold legibly in the domestic market are included in the GDP measure of an economy. Nevertheless, these productive measures also include activities which ultimately might contribute to the devastation of mankind and almost every form of life on earth. For instance, expenditures incurred as parts of security and safety measures such as those for defense or for scientific research which might create pollution, positively influence economic development of a nation. On the other hand, volunteering tasks that people engage themselves during periods of exigencies are often eliminated from channels towards development primarily because those works are not marketed.... 5-7). Factors leading to environmental degradation are some of the most vital factors which must not be ignored while assessing the quality of human life. One of the most important of such elements is the excessive use of fossil fuels which almost goes hand-in-hand with economic development though such activities could hamper the smooth flow of human life over time. In order to include these factors as a part of index for development, many organisations have suggested the use of complementary indicators which adjust the value of GDP in a nation in terms of environmental and quality of life aspects, which hints towards the significance of Gross National Happiness as a measure of economic development (European Commission, 2010). Two other factors which characterise Gross Domestic Product are that they do not represent the allocation of resources across cross-section. In addition, the components underlying GDP do not include most of the factors used by an average individual, which is wh y it cannot be regarded as a measure of social welfare (Naess & Rothenberg, 1990, p. 112). In fact, a rise in income need not reflect a betterment in the standard of living as had been empirically found in many researches. An eminent one out of them considers the time-series of happiness in relation to an enhancement in the economic growth rates in Japan when it was recuperating from the shocks of World War II. Between 1958 and 1987, real per capita income of Japan was raised five times that was reflected through an increased production of consumer durable goods, though no considerable change in the average level of subjective well-being in the nation (Easterlin, 1994, p. 38-40). Gross National