This blog post examines the correlation between economic growth and our lives and happiness, using statistics and case studies.

Does economic growth guarantee happiness?

Amidst a society where everyone—from government officials and business leaders to ordinary workers—focuses on economic growth, you’ve probably wondered at least once: ‘Would we be happier if the national economy grew beyond its current state?’ In this section, we’ll examine how happy Koreans are compared to people in other countries, based on UN and domestic research data, and explore the extent of the correlation between economic growth and happiness. We will also consider whether the people of Bhutan, often cited as the happiest nation in the world, are truly that happy. Furthermore, we will examine both the critical view that GDP growth rates fail to adequately capture people’s sense of happiness and life satisfaction, and the opposing perspective.

Can happiness truly be represented by GDP?

For decades, most nations have used GDP as the primary yardstick to measure their citizens’ quality of life. It serves as the benchmark to determine whether people’s livelihoods are improving, whether they are happier than in the past, and ultimately, whether the nation is prospering. Political leaders judge the effectiveness of governance based on GDP growth rates. GDP has become such a crucial benchmark that high GDP growth rates are often seen as a leader’s greatest achievement.
The practice of evaluating citizens’ quality of life based on GDP has continued until recently. While there are emerging efforts to find slightly different criteria, GDP—which calculates how much goods and services are produced—is still used as a metric for happiness. Robert Kennedy, who ran for U.S. president in 1968, expressed a critical stance toward measuring happiness with GDP in a speech: “Gross National Product calculates everything except that which makes life worthwhile.”
However, the argument that economic growth and personal happiness are inextricably linked remains the prevailing view. Indeed, numerous studies show that higher income correlates with greater life satisfaction and happiness. While happiness doesn’t increase in perfect proportion to rising income, a minimum level of economic wealth is essential to enjoy a stable life necessary for happiness.
So what about Bhutan, often called the “Happy Kingdom”? Nestled between China and India, this small nation of about 820,000 people is well-known to Koreans as a poor but happy country. The phrase “ranked first in the World Happiness Report” is a staple when describing Bhutan. According to World Bank statistics, Bhutan’s GDP per capita was $3,110 in 2017. This is about one-tenth of South Korea’s level, which recorded $29,742 that same year. Countries with per capita GDP levels similar to Bhutan’s include the Palestinian Autonomous Region of Gaza and the West Bank ($3,094) in the Middle East, Morocco ($3,007) in Africa, and the Philippines ($2,989) in Southeast Asia.
The notion that Bhutanese citizens are happier than Koreans implies that someone relatively poor can live happily and well, even compared to someone ten times wealthier. For an individual, this is certainly possible depending on their mindset. So, let’s examine the statistics to see if this is also possible at the national level. The most authoritative global happiness survey is the annual report published by SDSN (Sustainable Development Solutions Network), an advisory body under the UN. SDSN ranks the happiness levels of 156 countries worldwide for which statistical data is available. The detailed items used to calculate the happiness index include Gross National Income, life expectancy, social support, freedom of choice, perceptions of corruption, and social generosity. The scores from each item are added to determine a country’s happiness ranking, with a perfect score of 10 points achievable if a country receives the highest score in all categories.
In the report released in March 2018, South Korea ranked 57th with a score of 5.875. While its score increased slightly compared to 2017, its ranking fell by two places. So, where was the top spot? Looking at the top 10 countries, they are, in order: Finland, Norway, Denmark, Iceland, Switzerland, the Netherlands, Canada, New Zealand, Sweden, and Australia. All countries in the top 10 have high levels of GDP per capita. The prevalence of Nordic countries is also a notable feature.
So where did Bhutan, known as the happiest country in the world, rank? Even if it didn’t make the top 10, surely it placed within the 20th to 30th range? Or at least higher than South Korea? But the result was 97th place. The countries immediately above Bhutan were Vietnam and Indonesia, while those just below were Somalia and Cameroon.
This score feels rather meager compared to its reputation as the world’s happiest country despite its poverty. So why did this result occur? And what was the original catalyst for Bhutan gaining the reputation of being the world’s happiest country? Let’s explore. Bhutan earned its reputation as the world’s happiest country thanks to a survey by the New Economics Foundation (NEF), a think tank based in London, UK. In the 2010 National Happiness Index rankings released by NEF, Bhutan took the top spot among 143 countries. When the results showed that Bhutan, a poor country with a per capita income of less than $2,000, was the happiest nation in the world, not only Korean media but also international outlets were stunned and flooded the news with articles. This cemented Bhutan’s image as a happy nation.
In fact, the NEF’s happiness survey is considered quite unique and distinct from other institutions’ surveys. Simply put, while most other surveys reflect overall GDP size and per capita GDP in their happiness indices, the NEF places greater emphasis on how much resources were used to generate that GDP. This structure allows even poor countries with small economies and low national income to rank highly if they use resources sparingly. Due to these significantly different criteria, the top-ranked countries in NEF’s happiness survey often differ from the top lists in other surveys. For reference, the country ranked first in happiness by NEF in 2017 was Costa Rica, located in Central America. It was followed by the Dominican Republic, Jamaica, Guatemala, and Vietnam. In that survey, South Korea ranked 114th in happiness. The United States, which ranked 18th in the UN’s 2018 report, was only 114th. Due to the unique survey criteria, it can be seen that many low-income developing countries ranked high in the happiness rankings.
In fact, the countries ranked high in happiness in the NEF survey show poor performance not only in per capita GDP but also in various indicators of quality of life, such as infant mortality rate, illiteracy rate, life expectancy, and enrollment rates. This inevitably raises questions about the foundation’s survey results. For example, Bhutan’s infant mortality rate—meaning the number of children who die within a year of birth per 1,000 live births—reaches 25.6 (based on 2017 World Bank statistics). This means that for every 1,000 children born, 25.6 die within a year. In contrast, South Korea’s rate is only 2.8, lower than that of Germany, the Netherlands, and Denmark. The country with the lowest infant mortality rate was Iceland, at just 1.6. The country with the highest infant mortality rate was the Central African Republic, at 87.6.
Life expectancy, which predicts the average age a child born in a given year can expect to live, was only 70.2 years in Bhutan, while it was 82 years in South Korea. Infant mortality and life expectancy are used as representative statistics for citizens’ quality of life because these simple numbers comprehensively reflect healthcare standards, public health status, nutritional conditions, and public safety. It’s hard to accept that a country where the rate of children dying before their first birthday—before they can even take their first steps—is ten times higher than in South Korea is called a ‘happy country’.
In fact, Bhutan’s reputation as a happy nation stems not solely from once ranking first in an overseas think tank’s happiness survey. For decades, Bhutan has openly stated it governs the country with a greater focus on enhancing its citizens’ sense of happiness than on achieving economic growth. Representing this effort is Bhutan’s Gross National Happiness (GNH) index, a statistic first published in 2008. While GDP is a statistic measuring economic growth, GNH is a statistic focused on surveying the level of happiness felt by its citizens. After a pilot survey and announcement in 2008, it has been published twice more, in 2010 and 2015. Based on these GNH results, the Bhutanese government explains that it surveys how happy its citizens are, aiming to make happy people happier and prevent unhappy people from becoming unhappy. This government approach, prioritizing the elevation of its citizens’ happiness, has earned Bhutan its reputation as a happy country.
So, what exactly are the details of the GNH published by the Bhutanese government? Examining the statistical items provides insight into the conditions for a happy life as envisioned by the Bhutanese government. Simply put, Bhutan’s GNH is composed of 9 broad domains and 33 sub-domains. The nine representative conditions for achieving happiness are psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards. A common feature is the low weighting given to objective conditions that can be precisely quantified, such as income or assets. For example, the weight of living standards—such as income, assets, and housing—on happiness was only 1/9, or about 11%. This statistic is relatively favorable for Bhutan, which has a lower standard of living.
The weight of an individual’s health status on happiness was also only 1/9. When assessing the health status of its citizens, Bhutan does not use objective indicators like average life expectancy, life expectancy at birth, infant mortality rates, the number of people suffering from diseases, or the level of medical facilities and personnel. Instead, it gauges health by asking respondents how many days they feel healthy and inquiring about their mental well-being.
Bhutan’s GNH is compiled based on survey results from approximately 7,000 citizens. GNH statistics show that people’s happiness increases the more they engage in traditional games, which differs significantly from what we typically consider in happiness surveys.

Is GDP truly proportional to happiness?

Of course, this doesn’t mean Bhutan’s statistics are necessarily wrong, nor that measuring citizens’ quality of life based solely on GDP fluctuations is inherently correct. The very attitude of linking GDP to happiness faces considerable criticism. Critics argue that GDP, originally designed to measure the added value of goods and services produced within a country over a year, cannot serve as a valid basis for measuring people’s happiness.
This criticism gained traction following the publication of the so-called ‘Easterlin Paradox’. In 1974, American economic historian Richard Easterlin published a paper arguing that while comparing nations at a single point in time shows citizens of wealthy countries are on average happier than those in poorer countries, observing a single country over time reveals that even as per capita GDP rises, happiness does not increase proportionally with economic growth. Professor Richard Easterlin’s argument raised doubts about mainstream economics’ explanation that economic growth leads to greater happiness. It also became the starting point for efforts worldwide to develop alternative statistics to replace GDP.
However, the Easterlin Paradox also faced significant criticism. Critics argued that comparing fundamentally different types of statistics on the same scale leads to flawed analysis. GDP is a number that can grow indefinitely as long as the economy expands over time, whereas the happiness people feel is a subjective emotion with an uncrossable limit. To put it simply, per capita GDP can grow infinitely—from $100 to $5,000, $10,000, $50,000, and so on. But happiness measured through surveys can only be selected within a predetermined range, like choosing a number between 1 and 10. It’s a range with fixed upper and lower limits. No matter how happy a respondent feels, they can only express it within the survey’s fixed range (10 points if the maximum is 10, 100 points if the maximum is 100).
The relationship between GDP and happiness is similar to the relationship between GDP and average life expectancy. As GDP increases, people live in better homes, eat better food, and work in better environments, leading to longer average lifespans. However, beyond a certain point, even if GDP continues to grow, average life expectancy does not increase proportionally. This is because human lifespan has biologically determined limits.
Economists who argue that economic growth is a fundamental condition for people to feel happiness claim that when a recession hits, per capita GDP decreases, and the number of people losing jobs or unable to find work increases, the overall happiness of society significantly declines. This phenomenon, they argue, is precisely the evidence demonstrating that economic growth is a necessary condition for happiness.
So, what about Korea’s situation? Did Koreans become happier as their economy grew? Do people with higher incomes feel happier? Let’s examine data revealing the relationship between income and happiness. The Korea Institute for Health and Social Affairs published a study in December 2017 analyzing the happiness index of survey participants based solely on monthly income. It showed that those with lower incomes had lower happiness indices. The happiness index presented in this study used a scale where 10 was the highest score. Respondents reporting a monthly income of 1 million won or less had a happiness index of 4.98, the lowest among all respondents. The highest happiness index was recorded by respondents earning 10 million won or more per month, at 7.12 points. The next happiest group was the second-highest income bracket, those earning between 7 million and 9.99 million won per month. Overall, this statistic clearly showed that happiness levels increased as income rose. Regarding these results, the research team explained, “This particularly signifies that the happiness, life satisfaction, and future stability of low-income groups experiencing absolute deprivation and lack are significantly lower compared to those in the middle class and above.”
Similar results emerged from data released by Statistics Korea in September 2018. As household income increased, so did life satisfaction and positive responses to the question, “How happy would you say you were yesterday?” Notably, Statistics Korea’s data also showed that low-income earners making less than 1 million won per month were significantly less happy than other groups.
Talking about this makes me feel bitter, as if I’m saying that more money equals more happiness. In truth, statistics is a discipline dealing with probability and possibility. Without surveying every single individual living their own unique life, precise judgment is difficult. There will be people who are unhappy despite having a lot of money, and people who live perfectly happily even with little money. The statistics mentioned earlier also indicate that factors beyond income—such as age, marital status, and having close friends to confide in—significantly influence happiness.
While writing this blog post, I wrestled with many concerns. This was because I worried that this article might inadvertently cause unnecessary disappointment and bitterness in others. Nevertheless, I chose to explain the relationship between income and happiness because I sincerely hope our economy grows and prospers, even if it’s just to become happier. Reading ‘Our Kids’ by Robert Putnam, a sociologist and professor at Harvard University, further solidified this belief. This book meticulously details how the ladder of social mobility that made the American Dream possible over the past 50 years has crumbled. Professor Putnam explains how the experience of childhood poverty profoundly harms a child’s development and life trajectory. Personally, I believe education plays a crucial role in helping children escape poverty and lead bright, stable lives. If education enables these children to achieve economic stability, it can foster a happier society. For this very reason, our economy must continue to grow.