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B. Venkatesh

IF YOU are working for a professional firm, chances are your salary would have increased sizeably in the last 5-8 years. But has that improved your quality of life, or the standard of living as it is called in economics?

The gross domestic product (GDP) that economists use as a measure of the standard of living does not quite capture the quality of life. Why?

Suppose you spend 10-12 hours a day in the office to justify your high salary of Rs 5 lakh per month. You hardly have time to be with your family. You will contribute sizably to GDP, but what about your quality of life?

Or consider this: You live in a rich neighbourhood. Because of the economic policies, the income gap between the rich and poor has widened. This has lead to an increase in the crime rate. You live in constant fear of being mugged. GDP would increase, so long as more people like you earn high income. Yet, the standard of living may not be rising because of the high crime rate.

The above examples should convince you that GDP is not a good indicator to measure our quality of life. And if it has not, remember that GDP also includes knives and guns produced in the country that are used by gangsters to kill innocent people!

This is why Bhutan thought it fit to embrace a concept called Gross National Happiness. Several countries are concerned about their Human Development Index ranking and are trying to measure the standard of living through alternative models.

One such model is the Genuine Progress Indicator (GPI) developed by a US-based organisation Redefining Progress. This model adjusts the GDP for 10 indicators such as pollution and non-monetary work of homemakers.

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