The economy of hapiness

Human beings, driven by the need to respond to their desire to discover the new and, for that, to measure everything around them, creates and recreates ideas and practices, as is known, over time. In mid-1947, for example, the appearance of the Gross Domestic Product (GDP) indicator spread worldwide the use of economic indicators to measure a country’s progress. From the 1960s onwards, a new mentality arose in the United States, which sought to shift the focus from merely economic aspects to contemplate parameters that could measure the population’s well-being – then the “social indicators” were born.

Source: The boys were playing in the afternoon. After watching me with a camera, they suddenly came and requested to capture one photo of them. They were in jolly mind, their mind, heart is pure as their lough. Tamzid Rahman Leo, 2021.

In this context, a new systemic indicator emerged in the 1970s, developed in the kingdom of Bhutan – a small country located in Asia – with the support of the United Nations Development Program (UNDP): the Gross Domestic Happiness Index (FIB) . The FIB seeks to measure society’s progress from the following domains: standard of living, education, health, governance, culture, community vitality, ecological resilience, balanced use of time, and psychological well-being. Thus, this indicator has been developing, and its application has taken on worldwide proportions.

The Economics of Happiness investigates the factors behind people’s happiness, using not only concepts and tools from economics, but also from sociology, political science, and especially psychology. Studies in Happiness Economics are fundamentally empirical and based on surveys (opinion surveys) on the level of people’s happiness: the relationship between economic, social and demographic characteristics – among others – and the level of happiness reported by respondents, which it is analyzed statistically, in order to understand what makes some individuals happier than others (with econometric techniques, for example) (NERY, 2014).

Although new, the field has contributions from leading scholars. Several studies in the Economics of Happiness are based on the work of Nobel Prize winners in economics such as Daniel Kahneman, Amartya Sen, and Gary Becker. Professor Bruno Frey, one of the main exponents in the area, is listed among the fifty most influential economists in the world, ahead of well-known macroeconomists. Thus, the field has been consolidating itself as an emerging area, increasingly far from being just a mere curiosity.

“The concept of development is more qualitative, as it includes changes in the composition of the product and the allocation of resources by different sectors of the economy, in order to improve indicators of economic and social well-being (poverty, unemployment, violence, conditions of health, food, transport, education, hygiene and housing). In short, it is possible to state that economic development is something that combines growth (increase in per capita income) with income distribution (BRESSER – PEREIRA, 2017) ”.


Within the dominant paradigm of economic science, one of its many definitions mentions that its concern is with the study of the best alternative use of scarce resources, given the unlimited needs. Well then, would the needs be unlimited? Finally, the main indicator of countries’ wealth is the GDP (Gross Domestic Product). Would this indicator be the most appropriate? Health, food, transport, education, hygiene and housing). In short, it is possible to state that economic development is something that combines growth (increase in per capita income) with income distribution (BRESSER – PEREIRA, 2017).

According to Mankiw (1999, p. 484), GDP “is the market value of all final goods and services produced in a country in a given period of time”. As a wealth index, it measures both the economy’s total income and total expenditure on goods and services, yet its validity as an indicator of well-being is hotly contested. In this sense, GDP is not characterized as a perfect indicator of well-being, as it does not include some factors that contribute to a satisfying life, such as leisure. As Leamer (2009) adds, GDP is not happiness, but even limited to its material domain, it excludes much that is valuable and puts much of what is really unwanted.

Imagine, for example, that the government eliminated all environmental regulation; in this way, companies could produce more goods and services without taking into account the pollution they would create, so GDP would grow. However, the deterioration in air and water quality and the large production of waste would more than negatively offset the supposed gain in well-being, due to the increased production. By focusing on mere statistics of GDP and other conventional monetary indicators, we fail to distinguish between the qualitative aspects of growth; healthy and unhealthy growth, temporary or sustainable growth.

We do not question what growth is really necessary, what is really necessary to improve our quality of life (TIDEMAN, 2004, p. 228). Added to this are the limitations related to other aspects not included in the indicator, such as intangible capital (including human capital), leisure, income distribution, unemployment costs, informal economy, volunteering, national security, freedom and democracy, quality of public services (such as education and health), among others (BATES, 2009).

Still, as Leamer (2009) states, right or wrong, this has become the standard by which to measure the size and health of a country, and negative GDP growth should be carefully observed, as it represents an important symptom of economic disease. Corroborating, Bates (2009) advocates that, although limited, the GDP results are not so misleading that they need to be abolished, but that, on the contrary, they provide important information about nations.

In addition to GDP, other economic indicators are commonly used, as is known, by nations such as, for example, the GNP (Gross National Product) – which represents the sum of all goods and services produced by fixed residents of a nation, usually in one year. From the calculation of this indicator, it is possible to obtain the PNL (Net National Product), which corresponds to the total income of the residents of a nation, discounting the losses with depreciation, that is, the PNL corresponds to the GNP discounted from the depreciation capital (MANKIW, 1999).

As mentioned above, the exclusive use of these purely quantitative indices as a reference for evaluating the performance of a given region has led to widespread discontent, given the omission of qualitative dimensions, such as well-being. This movement implied the rise of new perspectives and reflections on the subject, from which emanated attempts to improve and approach reality.

In this context, the aforementioned social indicators emerge, which aim, as shown, at overcoming the limitations intrinsic to merely “economic” indicators. From a point of view, here considered as complementary, Psychopolitical Economics aims to offer an epistemic, theoretical and methodological path, which overcomes the dualist tradition, that is, it breaks regularity, which allows overcoming the Hobbesian axiom3. It also allows theoretical deepening of the great achievements obtained by political economies and cultural and sociocultural studies (OURIQUES, 2014).

Also according to Ouriques(2014) in relation to political economies, psychopolitical economics helps them to overcome the impasse generated by their focus on redistribution policies, since there are no natural resources to universalize goods and services perceived as developed, and that such a pattern of production and consumption cannot be naturalized as the human condition; and to cultural and sociocultural studies, it helps them to overcome their focus on identity politics, which places them in the unresolved impasse of being able to transform social, political and cultural rights into economic rights.
By proposing an opening to non-hegemonic epistemologies, Psychopolitical Economics helps, as said, academics, social and organizational leaders to prevent the triumph of economic and environmental devastation.

It is from the knowledge of how the Hobbesian axiom, and the corresponding financialization of the world (the fictitious capital to which Karl Marx already referred), install themselves in mental territories, that is, in the flows of thoughts (cognitive, instrumental, and axiological), affections (emotions and feelings), perceptions (feelings and intuitions) and volition, is that we are building epistemically, theoretically and methodologically, and in Segundo Ouriques (2014), we are well aware of the immense and growing current incapacity of institutions to be capable of helping subjects to cope with their lives. They were destroyed by the Hobbesian axiom (that is, that we would be incapable of overcoming violence) coming both from the social theories and methodologies of change, which naturalize it and from the neoliberal mental state whose enemy is the State as a moderator of Hobbesian interests.


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