23 Jun, 2011, 03.59AM IST, NEERAJ KAUSHAL, Economic Times

Does money buy happiness? Are people living in rich countries happier than people in poorer countries? Does economic growth lead to happiness? Is it possible to measure happiness or well-being? There was once a time when such questions were left to philosophers to understand. Quantifying happiness was out of question; attaching a money value to it was blasphemy. And then entered in this field the scientist. Economics of happiness is now a growingly large field of research. Social scientists have begun to question the age-old assumption that all economic activity is in the pursuit of happiness to maximise what in economics jargon is called 'utility'. Economists have started measuring happiness, conducting statistical analysis to investigate the factors that 'determine' happiness and if money happens to be one of them. The Great Recession in Europe and the US and its painfully slow demise has led politicians to join the search for more appropriate measures of national well-being and happiness. The age-old metric of economic activity - the gross domestic product - is felling out of favour with many western governments. In September 2009, on the first anniversary of the collapse of Lehman Brothers, French President Nicolas Sarkozy asked other nations to drop their obsessions on GDP and a adopt measure of 'well-being' as the metric of progress. A year later, the British Prime Minister David Cameron asked the Office of National Statistics in the UK to produce an index to gauge the general wellbeing of the people by assessing their psychological and environmental well-being. A number of other countries, including Canada and Australia, are also considering developing such a measure. Cameron, however, wants to go a step further. He wants to use the new measure to steer public policy. The concept of measuring progress with happiness and not economic activity is not entirely western. The former king of Bhutan coined the term gross national happiness about four decades ago and the Bhutanese government has developed detailed surveys to measure it. American politicians, of course, have a greater faith in the market than fellow politicians across the Atlantic or up north in Canada. But they too are finding it hard convince the American public that GDP growth reflects prosperity of all. The US economy is in what seems to be a long phase of jobless (read: joyless) recovery with stagnating wages. The growth in GDP for the past few quarters, therefore, does not reflect the plight of the families most hit by the recession. Economists and psychologists are devising ways of measuring happiness and well-being. Alan Krueger, former assistant secretary for economic policy and chief economist of the US department of treasury, and psychologist Daniel Kahneman and colleagues have developed what they call the 'national time accounting' (NTA) - as opposed to national income accounting, which is used to measure income or GDP. NTA is based on surveys that involve asking respondents to keep a diary of their daily activity and record their feeling about each of the activity on an 'enjoyment scale'.........................................................................