The Stages of Economic Development and Human Development: Considering Happiness as a Supplementary Social Goal for the Developed Countries

Kim, Seonga (2016). 'The Stages of Economic Development and Human Development: Considering Happiness as a Supplementary Social Goal for the Developed Countries' Paper presented at the annual conference of the HDCA, Tokyo 2016.

As the alternatives to Gross Domestic Product, human development has been paid attention as a new social goal, leading policy experts to have interests in the Human Development Index as an indicator to measure social progress. However, for already developed countries, there is not enough room to increase the human development index, simply because their scores are close to the ceiling of the range of the number. Therefore, the need to explore new social goal for developed countries arose, so I would like to suggest the notion of subjective happiness that individuals feel in well-equipped circumstances in terms of health, education, and economic affluence.
Subjective well-being was mentioned with objective living conditions, or capabilities, and fair allocations as a main measurement dimension shaping quality of life in the report of the commission on the measurement of economic performance and social progress written by Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi in 2009. However, while capabilities and equal distribution are discussed in the form of HDI and Inequality-adjusted HDI, happiness has not occupied its place to be dealt with, because there are several critics of subjective notions. Sen (2009: 269-290), for example, pointed out that the use of subjective happiness per se may be misleading public attention due to its own characteristics, such as incomparability between individuals, adaptation to expectation and perception.
However, it is also obvious that the room for the pursuit of longer life, higher education, and increases in income is different for each country which experiences the different stage of economic development. In the case of South Korea, its life expectancy is over 81 and expected years of schooling is approaching 20 in 2014, getting rank 17th out of 188 countries. However, the rank of subjective happiness during 2012-2014 is only 47th out of 158 nations (UNDP, 2015; Helliwell, et al., 2015). This difference between HDI and Happiness ranks of so-called developed countries implies that there may be a paradox between capabilities and subjective happiness if we consider the development level of countries.
Here is another example: Even though the total correlation coefficient between the HDI and life evaluation is 0.77 (Hall, 2013: 145), regression coefficients and its statistical significance between those indicators are different depending on the stages of economic development. Specifically, when I divided countries into 4 groups by using GNI per capita, the regression coefficient of very high GNI per capita group was 10.74 at the statistically significant level while the coefficients of high and medium GNI per capita group did not have a significant impact.
Furthermore, more and more psychology and neuroscience studies support that measure of life satisfaction appear to be less subject to some situations in which questions are asked and even the results of surveys are stable (O’Donell, et al., 2014).
Accordingly, governments should take consideration into their level of economic development and consider social contexts which affect the effect of public efforts on policy objectives in order to increase people's happiness. For developing countries, they need to focus more on building human development conditions. In other words, public efforts may be put into more subjective areas if the society is going through the transition from industrialization to post-industrialization.
To accomplish the aim of this preliminary study, I will consider the empirical relationship between GNI per capita, HDI, subjective happiness, and social drivers at nation level and will look at the possibility of making an aggregation index by using subjective well-being and HDI. By doing this, I expect that we can explore the possibility to search a new social goal for post-industrialized societies.

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