Measuring Well-Being: HDI vs. Gross National Happiness

How do we know if a country is truly doing well? For decades, economic output was the default answer – the bigger the GDP, the better. But that thinking has shifted. Today, two frameworks stand out for measuring progress beyond money: the Human Development Index (HDI) and the Gross National Happiness (GNH) index. One was born inside the United Nations system; the other emerged from a small Himalayan kingdom. Together, they tell us something important – that well-being is far more complex than any single number can capture.

What is the Human Development Index (HDI)? 🔗

The HDI is a composite measure created by Pakistani economist Mahbub ul Haq in 1990, rooted in the capability approach of Nobel laureate Amartya Sen. Its core idea is straightforward: a country’s development should be judged by what people can do and become, not just by how much money their economy generates.

The United Nations Development Programme (UNDP) publishes the HDI annually, ranking countries on a scale from 0 to 1 across three dimensions:

Health – measured by life expectancy at birth. Education – captured through mean years of schooling for adults (25 years and above) and expected years of schooling for children entering school. Standard of living – assessed using gross national income (GNI) per capita at purchasing power parity, with a logarithmic scale to reflect the diminishing returns of higher income.

These three dimension indices are combined using a geometric mean, producing the final HDI score. Countries are then grouped into four tiers: very high human development (0.8-1.0), high (0.7-0.799), medium (0.55-0.699), and low (below 0.55).

Who tops the HDI rankings? 🔗

Countries like Switzerland and Norway consistently rank near the top. These nations typically share common traits – stable governance, strong public healthcare and education systems, and high per capita income. Norway alone has topped the list sixteen times since the HDI’s inception. On the other end of the spectrum, least-developed countries often score below 0.55, facing challenges such as widespread poverty, limited healthcare access, and low educational attainment.

The 2025 Human Development Report, released in May 2025, uses data from 2023 and covers 193 UN member states. A key finding from recent reports is that recovery from the COVID-19 setback has been deeply unequal – while OECD nations have surpassed their pre-pandemic HDI levels, only about half of least-developed countries have recovered their already low pre-crisis scores.

Limitations of the HDI 🔗

Despite its widespread use, the HDI has well-documented gaps. It was designed to be simple and easy to compare – but that simplicity comes at a cost.

No account of inequality 🔗

The standard HDI assumes equal distribution of health, education, and income across a population. A country with a high average HDI could still have deep internal disparities. The UNDP addressed this partly by introducing the Inequality-adjusted HDI (IHDI) in 2010, which discounts the HDI based on the level of inequality in each dimension.

Missing sustainability metrics 🔗

The HDI does not account for environmental degradation or resource depletion. A country could score very high on HDI while contributing heavily to climate change. This gap led to the creation of the Planetary Pressures-adjusted HDI (PHDI), though it remains supplementary rather than central to the index.

No measure of political freedom or subjective well-being 🔗

Democracy, civil liberties, personal safety, cultural identity, community strength, and people’s own sense of life satisfaction are entirely absent from the HDI. Two countries can have nearly identical HDI scores while offering vastly different levels of personal freedom and social cohesion.

Gender gaps only partially addressed 🔗

The UNDP introduced the Gender Development Index (GDI) in 1995 and the Gender Inequality Index (GII) later, but neither is baked into the core HDI figure. Gender-based disparities in opportunity and outcome remain an add-on rather than a foundational element.

These limitations don’t make the HDI useless – it remains one of the most widely used development indicators globally. But they explain why other frameworks have emerged to fill the gaps.

Introducing Gross National Happiness (GNH) 🔗

In the 1970s, Bhutan’s fourth king, Jigme Singye Wangchuck, made a statement that would define his country’s development philosophy: “Gross National Happiness is more important than Gross Domestic Product.” What started as a guiding principle was formally adopted into Bhutan’s Constitution in 2008, making GNH the country’s official development framework.

GNH is not a single-question happiness survey. It is a detailed, multidimensional index built on the principle that progress should balance material prosperity with social, cultural, environmental, and psychological well-being. The framework is grounded in Bhutanese cultural values and Buddhist philosophy about what constitutes a good life.

The four pillars of GNH 🔗

The entire GNH framework rests on four foundational pillars: sustainable and equitable socio-economic development, environmental conservation, preservation and promotion of culture, and good governance. These pillars provide the philosophical base upon which the measurement system is built.

The nine domains of GNH 🔗

The four pillars are expanded into nine equally weighted domains, which form the backbone of the GNH Index. Each domain captures a distinct aspect of well-being:

Psychological well-being – covers life satisfaction, emotional balance, and spirituality. Health – includes self-reported health status, disability, and mental health indicators. Education – goes beyond literacy to measure knowledge, values, and educational attainment. Time use – assesses work-life balance, with a sufficiency threshold of eight hours of sleep per day. Cultural diversity and resilience – measures engagement with cultural activities, language preservation, and artisan skills. Good governance – evaluates trust in institutions, political participation, and quality of public services. Community vitality – captures social support, relationships, volunteerism, and sense of belonging. Ecological diversity and resilience – tracks environmental quality, wildlife damage concerns, and ecological knowledge. Living standards – covers income, asset ownership, and housing quality.

These nine domains are further divided into 33 indicators, each with specific sufficiency thresholds. An individual is classified as “happy” if they achieve sufficiency in at least 66% of the weighted indicators. The index is then calculated using the Alkire-Foster method, the same methodology used for the Global Multidimensional Poverty Index.

How does GNH work in practice? 🔗

Every few years, the Centre for Bhutan & GNH Studies conducts a national survey covering over 10,000 randomly selected households across all twenty districts. The survey results are disaggregated by gender, age, district, rural/urban residence, and occupation. This data directly feeds into Bhutan’s five-year development plans and is used through a GNH Policy Screening Tool to evaluate whether proposed policies will positively or negatively affect national well-being.

According to the Asian Development Bank, a key distinction between GNH and GDP is that GNH has a maximum value. Once all citizens reach income sufficiency (set at 1.5 times the national poverty line), additional income growth does not raise the GNH Index. This design feature pushes policy attention toward underperforming domains rather than endlessly chasing economic growth.

Results from the 2022 GNH survey 🔗

The most recent GNH survey, released in May 2023, showed the overall GNH Index value rose from 0.743 in 2010 to 0.781 in 2022. The share of people classified as “happy” (those with sufficiency in at least 66% of indicators) increased from 40.9% in 2010 to 48.1% in 2022. Among respondents, 9.5% were “deeply happy,” 38.6% “extensively happy,” 45.5% “narrowly happy,” and 6.4% “unhappy.”

Comparing HDI and GNH 🔗

While both indices reject GDP as the sole measure of progress, they differ fundamentally in scope, methodology, and philosophy.

Scope of measurement 🔗

The HDI measures three dimensions – health, education, and income – using objective, internationally comparable data. GNH spans nine domains that include subjective factors like psychological well-being, cultural preservation, community vitality, and ecological health. In short, HDI asks “what material conditions do people have?” while GNH asks “are people flourishing across the full range of life?”

Objective vs. subjective data 🔗

HDI relies entirely on objective statistical indicators – life expectancy figures, enrollment data, national income statistics. GNH blends objective and subjective measures, including self-reported well-being and survey-based assessments of governance and cultural engagement. Within the GNH framework, objective indicators receive higher weights, but subjective responses are still integral.

Global applicability vs. cultural specificity 🔗

The HDI is applied across 193 UN member states and enables direct cross-country comparison. GNH was designed specifically for Bhutan’s cultural context and is deeply tied to Bhutanese and Buddhist values. This cultural grounding makes GNH difficult to replicate elsewhere in its exact form, though its principles have inspired adaptation. The OECD Better Life Index, New Zealand’s Well-being Budget, and the Canadian Index of Wellbeing all draw on ideas aligned with the GNH philosophy.

Policy integration 🔗

HDI primarily serves as a diagnostic and ranking tool. It helps identify which countries need assistance and where gaps exist. GNH, by contrast, is embedded directly into Bhutan’s policymaking process – from five-year planning to individual project screening. Businesses in Bhutan even receive GNH certificates for operations aligned with the nine domains.

A quick comparison 🔗

Origin: HDI – United Nations Development Programme (1990); GNH – Kingdom of Bhutan (1972 concept, 2008 constitutional adoption). Dimensions: HDI – 3 (health, education, income); GNH – 9 (including culture, governance, ecology, psychological well-being). Data type: HDI – objective; GNH – mixed (objective and subjective). Scale: HDI – global (193 countries); GNH – national (Bhutan). Focus: HDI – material conditions and capabilities; GNH – holistic well-being and sufficiency.

Can HDI and GNH learn from each other? 🔗

There are signs of convergence. The UNDP has steadily expanded its toolkit beyond the core HDI to include the IHDI, GDI, GII, Multidimensional Poverty Index, and the Planetary Pressures-adjusted HDI. These supplementary indices address many of the criticisms that GNH proponents have long raised – inequality, gender, sustainability.

On the other side, efforts to standardize aspects of GNH measurement could make its principles more applicable across different cultural settings. Advances in survey methodology and data collection – including digital tools and more frequent sampling – may eventually allow GNH-style assessments to scale beyond Bhutan.

It is worth noting that countries ranking high on HDI often perform well on global happiness surveys too. Norway, Denmark, and Switzerland regularly appear near the top of both HDI rankings and the UN World Happiness Report. This suggests that material well-being and happiness are correlated – but not identical. High HDI alone does not guarantee a population that feels fulfilled, connected, and at peace with its environment.

Why does this matter for sustainability? 🔗

The question of how we measure progress is central to sustainability science. If governments optimise only for GDP or even HDI, they may pursue growth that degrades ecosystems, erodes community ties, and ignores mental health. GNH explicitly includes ecological diversity and cultural resilience as core domains, embedding sustainability into the definition of national success.

Both frameworks remind us that development is not a single number. It is a complex, evolving picture of what it means for people to live well – now and in the future.

What do you think? Should more countries adopt GNH-style frameworks alongside HDI, or is the practical difficulty of measuring subjective well-being across diverse cultures too great a barrier? And when you think about your own well-being, which dimensions – material security, community, health, cultural identity – matter most to you?

References

1. https://en.wikipedia.org/wiki/Human_Development_Index
2. https://hdr.undp.org/data-center/human-development-index
3. https://hdr.undp.org/
4. https://www.oecd.org/en/publications/well-being-knowledge-exchange-platform-kep_93d45d63-en/bhutan-s-gross-national-happiness-gnh-index_ff75e0a9-en.html
5. https://en.wikipedia.org/wiki/Gross_National_Happiness
6. https://ophi.org.uk/gross-national-happiness
7. https://blogs.adb.org/blog/your-questions-answered-what-bhutan-s-gross-national-happiness-index
8. https://theeconosphere.com/beyond-gdp-exploring-alternative-measures-of-economic-well-being/
9. https://worldpopulationreview.com/country-rankings/hdi-by-country