Which is more important: wealth or happiness?

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While America has traditionally measured its success by looking at numbers such as the Gross Domestic Product (previously the Gross National Product), a growing number of scholars are questioning whether this is really the best way to assess how well-off we are.

Gross Domestic Product (GDP) is defined as the total value of final goods and services produced within a country's borders in a year, regardless of ownership.

"Negative events that reduce well-being actually increase GDP," says A. J. Senchack, holder of the Lucy King Brown Chair in International Business at Southwestern University in Georgetown, Texas.

Hurricane Katrina is a case in point. While this was a personal disaster for hundreds of thousands of citizens, recent figures for the country's GDP showed a robust growth of 4.1 percent due to the huge medical expenses and rebuilding costs associated with the hurricane. Many other transactions such as crime, divorce and environmental degradation have a similar impact on GDP.

Senchack says that GDP was never intended to be a direct measure of economic health or well-being. "Our policymakers, economists and the media bestowed that role on it," he says.

Their rationale for doing so, he says, was logical: the more a nation produces and consumes, the wealthier it is. This also means its standard of living becomes higher. Hence, its citizens should be better off or happier.

"But there is a disconnect here," Senchack says. "Being wealthier simply does not translate into being happier. Many studies show the United States to be no happier than it was 50 years ago; we are no happier than when we were poorer."

Researchers have recently created a new field of inquiry known as the economics of happiness or well-being. The field is a multidisciplinary one that draws on work in economics, neuroscience, psychology and sociology.

Senchack says he hopes that study in this field will help lead to alternative national well-being measures that give a more representative picture of how happy people are. An example of such an index is the "Genuine Progress Indicator" created by the public policy organization Redefining Progress. This index starts with GDP and then adjusts for income distribution and leisure time, adds household and volunteer work, and subtracts the costs of crime, family breakdown and pollution.

He also hopes this research will encourage governmental policies that take well-being into account, rather than solely focusing on economic growth.

"We need to be as concerned about 'affluenza' as we are about influenza," Senchack says.

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