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The Evolution of National Accounting and New Statistical Information: Happiness and Gross Domestic Product, Can We Measure It?

Abstract

Studies on happiness have acquired a particular importance over time. They have been considered useful not only for addressing policies on income production and distribution, but also in the quest for achieving happiness. This article will examine the following aspects: (a) reasons why in the future, the System of National Accounts (SNA) will have to introduce happiness as an economic aggregate measure following the “Happiness: towards a holistic approach to development” (R. 65/309) resolution, thus reconsidering SNA reference standards; (b) an evaluation of whether or not the introduction of happiness into the SNA and gross domestic product is methodologically correct; (c) the possibility of introducing a new objective indicator (coherent, pertinent and relevant) to measure the discomfort of society due to modernization; (d) to provide empirical evidence of this discomfort through the use of various approaches that take antidepressant expenditure into consideration as a new measure of unhappiness.

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Notes

  1. 1.

    See par. 5.2.

  2. 2.

    Despite the first step towards an International Accounting System in 1947, the first official methodology reference manual for all countries, The System of National Accounts (SNA), was created in 1968 (United Nations 1968), and was revised in 1993—SNA’93—(United Nations 1993) and in 2008—SNA’08—(United Nations 2008). For European Countries, The European System Account reference manual was published in 1970—ESA’70—(Eurostat 1970), revised in 1995—ESA’95—(Eurostat 1995) and again in 2010—ESA’10—(Eurostat 2014). The SNA and ESA manuals are very similar, but there are still several differences that exist, such as those regarding satellite accounts. For further information about the evolution of the National Account System, visit: http://unstats.un.org/unsd/nationalaccount/hsna.asp, Historic Versions of the SNA.

  3. 3.

    Economic Growth is an increase in a country's real level of national output, while economic development is an increase of living standards, which takes into account the progressive changes in the socio-economic structure of a country.

  4. 4.

    For this reason, “the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being” (Stiglitz et al. 2010) using health, education, personal activities (including work), political voice and governance, social connections and relationships, environment (present e future conditions), economic insecurity and physical nature as key indicators of well-being, to be considered simultaneously with material living standard (income and consumption rather than production).

  5. 5.

    Welfare and well-being are not always used with the same meaning. For example, in the 1970s, the Netherlands used the slogan “not welfare, but well-being” during the “limits to growth” movement.

  6. 6.

    It’s defined as an integrated system because the “accounts are all the consequences of a single action made by one agent and are necessary reflected in the resulting accounts, including the impact on measurement of wealth captured in balance sheets” (SNA’08 chapter 1, A, par. 1.1 c.).

  7. 7.

    See Note 2 and recall that between the SNA and the ESA, the definition of production is the same, while there are some differences in regards to “satellite accounts.”

  8. 8.

    In September 2014 the ESA’10 will enter into force and change the definition of production (ESA’10 par. 3.1), for example, illegal activity will also be included within GDP.

  9. 9.

    MacCall defines quality of life as “necessary conditions for happiness” (1975), Terhune defines it as “subjective satisfaction itself” (1973), Colby defines well-being as “adaptive potential” (1987), Jolles and Stalpers define happiness as a “basic commend of life” (1978), Veenhoven lists fifteen definitions of happiness (1984).

  10. 10.

    Non-profit is, in fact, an important institutional sector of the SNA (SNA par. 4.2).

  11. 11.

    Keep in mind that landscape and cultural heritage are stocks, while production accounts include monetary flows.

  12. 12.

    In our analysis, it is not important to illustrate the pros and cons of using an objective indicator instead of subjective well-being when measuring the quality of life (that is well-being or happiness), because much of this information is already known. “The growth of the social indicators movement coincided with the questioning of economic growth in terms of whether more was always better. Subject well-being (SWB) research, in contrast is concerned with the individuals subject experience of their lives” (Diener et al. 1995).

  13. 13.

    We have epidemiologic studies that provide strong evidence that lifestyle changes may be the cause of increasing rates of depression, particularly in young people (Klerman et al. 1985; Seligman 1988).

  14. 14.

    Biological and physical factors include season changes, nutrition and dietary factors, rain, temperature changes, noises and environmental disasters. Clinical studies seem to show that people who are afraid of wasting time, or those living with a great sense of competitiveness, suffer from more stress, anxiety, and in some cases, depression as well. In agreement with psychological and sociological studies, a number of personal and socio-economic characteristics have been identified that are associated with happiness and satisfaction (Peiro 2006). These include health (Veenhoven 1991), age (Oswald 1997), social relationships (marital status in particular) (Argyle and Martin 1991; Lee et al. 1999; Blanchflower and Oswald 2004), political goals and development (Argyle 1987; Frey and Stutzer 2000a, b).

  15. 15.

    On this matter, refer to (Latouche 2011).

  16. 16.

    For the correlation between happiness and depression see (Fordyce 1988).

  17. 17.

    Cardiovascular and gastrointestinal disease costs may be included in this cost because at least part of these diseases seem to be linked with everyday stress. The classification used is Anatomical Therapeutic Chemical (ATC), used by the European Pharmaceutical Research Association. We thank the Agenzia Italiana per il Farmaco (AIFA) for their cooperation.

  18. 18.

    Even if health expenditure is included within the GDP, we do not know if antidepressant expenditure is included in health expenditure, so we cannot apply any reclassification to GDP.

  19. 19.

    If we use the relative variation, we should have a measure of elasticity.

  20. 20.

    Explanatory variables in x i that are correlated with the equation’s term u i, \({\text{E}}\{ {\text{x}}_{\text{i}} ,{\text{u}}_{\text{i}} \} \ne 0\), are said to be endogenous.

  21. 21.

    The error term of the classical regression model breaks into two components ε i  = α i  + u it , and in α i we include all fixed omitted variables, and the unobserved heterogeneity is absorbed into the individual fixed component of the error term.

  22. 22.

    Thus, the importance of the cultural aspect in this type of qualitative study is evident, and must also be able to represent an interpretative filter to contextualize the variables and to use the most suitable statistic methodology to individuate the existence of probable associative relationships (Verbeek 2012). The panel model is therefore the best instrument for this type of problem.

  23. 23.

    Keep in mind that fixed effects discard all variation between individuals using only variation over time within an individual and the variables in the model are not cointegrated (Kao 1999; Levin et al. 2002).

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Correspondence to Fabrizio Antolini.

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Antolini, F. The Evolution of National Accounting and New Statistical Information: Happiness and Gross Domestic Product, Can We Measure It?. Soc Indic Res 129, 1075–1092 (2016). https://doi.org/10.1007/s11205-015-1156-6

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Keywords

  • GDP
  • Well-being
  • Happiness
  • Economic growth

JEL Classification

  • A12
  • E01
  • I31