Sunday, 17 June 2012

Singapore’s growth, the Happiness Index and economic stagnation

I suspect Singapore's 'opposition' bloggers are aflame with articles playing up Singapore's very poor rankings in a global 'Happiness Index' calculated by the New economics Foundation. The Republic ranked 90th out of 151 countries. By comparison, Pakistan ranked sixteenth, below Bangladesh at eleven. At the top was Costa Rica. China was in between at 60 while India came in at 32.

Undoubtedly, the Happiness Index data rankings should give Singaporeans pause for thought. However, that Singapore can easily recruit 'foreign talent' from seemingly 'happier' countries like Bangladesh, India and China and get individuals to move to an unhappier country, i.e. Singapore, also tells us something about the imperfections of the Happiness Index.
It's hard to quantify an emotional concept like happiness into one single number.

The Happiness Index uses a methodology which combines three factors: experiential (how happy people in a particular country explicitly say they are); life expectancy and a country's ecological footprint. A nation with a high ecological footprint is penalized as its happiness is deemed not to be 'sustainable.' Consequently, wealthy nations with high carbon footprints are virtually non-existent from the list of top twenty-five 'happiest' nations.
The situation changes if countries are ranked solely on how happy their citizens claim to be, the 'experienced well being' factor. Wealthier countries dominate the top of the list. Singapore jumps to 34 while Pakistan, Bangladesh and India drop to 72, 83 and 84 respectively. Meanwhile, China moves into triple digits at 102.
(Apparently, the Happiness Index is a good way for left wing 'new age' economists in wealthy societies to make poorer nations feel better about maintaining lower standards of living by emphasizing the lower carbon footprint as a key to happiness!)
Clearly, one idea suggested by the index is that happiness encompasses more than simply economic prosperity. Material wealth is important – but not necessarily as a goal unto itself. A 'basic minimum' standard of living is necessary for humans to pursue self-actualization but beyond such a threshold the impact on a person's 'happiness' is subject to debate.
Wealth must serve a higher purpose. Arguably, Singapore has achieved a critical mass in wealth. The question Singaporeans must answer now is, 'What's next – chasing after more wealth? Or shaping Singapore society for future generations – in a more balanced and sustainable manner?'
It is not a trick question, folks. There is an easy answer.
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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com.

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