Happiness and Asian economies

Bhutan, a small, land-locked Asian country, became one of the first, if not the first, in the world to dethrone GDP and enshrine ‘Gross National Happiness’ as a core development goal. It played a pivotal role in the proclamation of UN resolution 66/281 at a meeting of the General Assembly in July 2012. As the UN notes:

The meeting was convened at an initiative of Bhutan, a country which recognized the supremacy of national happiness over national income since the early 1970s and famously adopted the goal of Gross National Happiness over Gross National Product.

The General Assembly of the United Nations in its resolution 66/281 of 12 July 2012 proclaimed 20 March the International Day of Happiness recognizing the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings around the world and the importance of their recognition in public policy objectives.

Measures of happiness, based on so-called ‘life satisfaction’ surveys, usually rely on self-reported conditions of well-being. Hence, measures of happiness are invariably subjective, which is why they are often called measures of ‘subjective well-being’ (SWB).

This does not mean SWBs are unreliable. External validation of survey-based happiness estimates have found them to be reasonably accurate.

SWBs rely heavily on the Gallup surveys of citizens every year in more than 160 countries conducted in more than 140 languages. It is based on the notion of the ‘Cantril ladder’ or life ladder. It is derived from responses to the following question posed in the Gallup survey: “Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”

The life ladder estimates enable countries to be scored and ranked on a scale of 0 (=worst) to 10 (= best). The country-specific scores and ranks are based on multi-year averages rather than one specific year. Figure 1 displays the 2021 country-specific scores for selected countries in the Asian region (where the scores are derived from 2018-2020 observations). The Asian countries are also compared with the global average for 2021 and the best performer for that year (Finland).

Figure 1

Source: Derived from World Happiness Report, 2021

There are several noteworthy features. Afghanistan is the worst performing country (2.52) not only in the Asian region but in the world at large. In general, the majority of Asian economies (20) in the sample reported here have a life ladder score ranging between 2.52 to 5.48 that place them below the global average (5.61) and far below the best performer (7.84) which is Finland. These estimates suggest that many Asian economies are ‘struggling’ (to use Gallup’s taxonomy) and, in at least two cases, ‘suffering’ (Afghanistan, India).

It is also noteworthy that at least three high income Asian economies – Hong Kong, South Korea and Japan – have scores below Uzbekistan which, according to World Bank classification  is a lower middle-income economy. These high-income Asian economies are the exception rather than the norm, as the top 20 economies in the world in terms of the happiness index reported here are usually high-income countries ranging from Finland (7.84, ranked 1) to Belgium (Belgium 6.83, ranked 20). One notable exception in this ‘top 20’ is Costa Rica which is classified as an upper middle-income country by the World Bank.

Policy makers in Asian economies that are worried about lack of happiness in their societies can draw on statistical exercises undertaken by the authors of the World Happiness Reports. What the statistical analyses show is that  income is only one determinant of life satisfaction that is, in turn, complement by multiple non-income variables. These include: (1) social support (that is a network of friends and relatives that one could draw on in times of personal distress (2) healthy life expectancy at birth (3) freedom to make life choices (4) generosity (share of those who donate to charitable activities (5) perceptions of corruption. The policy lesson is that a narrow focus on economic growth will not necessarily produce a happy society unless they are complemented by a focus on non-income dimensions that affect well-being. This multidimensional approach will acquire greater salience today, given COVID-19.

Bangladesh at 50: South Asia’s ‘standout star’?

Early this year, Bangladesh celebrated its 50th year as an independent nation. ‘The country was born’, writes Bloomberg columnist Mihir Sharma, ‘amid famine and war; millions fled to India or were killed by Pakistani soldiers’. At the time of its birth, Bangladesh was dismissed as a ‘basket case’, while superstars in the music profession scrambled to raise money to support aid programmes to assuage the suffering of a hungry, impoverished nation.

Today, Bangladesh is classified by the World Bank as a ‘lower middle income economy’ with notable progress in a broad range of social indicators. As the Economist noted nearly ten years ago, Bangladesh has come ‘out of the basket’.

What struck Sharma is that Bangladesh has quietly overtaken its once-richer South Asian neighbours – Pakistan and India. As he notes: ‘In 1971, Pakistan was 70% richer than Bangladesh; today, Bangladesh is 45% richer than Pakistan.’ Sharma reserves the strongest words of rebuke for India:

India — eternally confident about being the only South Asian economy that matters — now must grapple with the fact that it, too, is poorer than Bangladesh …Don’t hold your breath expecting India to acknowledge Bangladesh’s success: Right-wing figures in India are convinced Bangladesh is so destitute that illegal migrants from there are overrunning the border. In reality, Bangladesh is far richer than the depressed Indian states where Hindu nationalist politicians have been railing against Bangladeshi “termites.” It’s as if Mississippi were fretting about illegal immigration from Canada.


The Bangladesh government has recently announced that the country’s per capita GDP has risen to USD 2,227 thus consolidating its position as a lower middle income economy. This has happened despite the adverse shock of the current global pandemic because the country managed to maintain its rapid pace of growth. Indeed, from being a growth laggard relative to its powerful neighbours, Bangladesh has emerged as a growth leader. It did not even suffer a recession during the first wave of COVID-19 in 2020 – see the figure below culled from IMF DataMapper. The projections to 2025 suggest that Bangladesh will grow significantly faster than either India or Pakistan.

Figure 1: Comparative growth rates (%), 1980-2025, Bangladesh, India, Pakistan

Sharma attributes Bangladesh’s economic success to ‘exports, social progress and fiscal prudence’. These ‘three pillars’ are part of the story, but Sharma could have acknowledged that there is a rich literature trying to comprehend the ‘Bangladesh paradox’. How did an impoverished nation, dismissed as a basket case, and saddled with seemingly dysfunctional institutions and a corrupt, highly adverserial political system manage to get ‘out of the basket’?

Sharma, however, correctly notes that ‘Bangaldesh’s success brings its own set of problems’. He rightly opines that ‘(t)he government needs a strategy for the next decade that focuses on new forms of global integration and on a continued transformation of the economy’. This is a transition that ‘will test Bangladesh as it has …other nations’.