Has
the Present Govt. Improved Pakistan’s Well-being?
By Dr. Ahmad Faruqui
Danville, California
Seeking to put a new face on
its legitimacy, the military government has put
its macroeconomic statistics on parade. Over the
past two years, we are told that the GDP has grown
at an annual rate of 5.8%, per capita income at
13.9%, and exports at 17%. National savings, as
a percent of the GDP, have grown by 8.3 percentage
points since 1998/99. Pakistan has attracted foreign
direct investment of almost a billion dollars
and foreign exchange reserves are at an all time
high of $12.5 billion. Moreover, defense spending
is coming down as a percent of the GDP. In other
words, Pakistan is about to become an economic
tiger.
Are things really that rosy? It’s very difficult
to say, unless a third-party can be brought in
to assess the veracity of the government’s
figures, especially regarding defense spending.
The more fundamental question is whether one can
evaluate and measure national well-being with
macroeconomic indicators. The late Dr. Mahbub
ul Haq, working in conjunction with Nobel Laureate
Amartya Sen, created the Human Development Index
(HDI) to provide a better measure of well-being
than GDP. It combines three factors into a single
number: life expectancy, adult and primary literacy,
and per capita GDP.
In 2001, Pakistan had an HDI score of .499, which
was up substantially from 0.183 since 1960. But
when compared with other countries in 2001, it
still had a long way to go since about 125 countries
ranked ahead of Pakistan.
And even HDI has its limitations. Both Haq and
Sen regarded it as a “vulgar” measure
that was intended to take people’s minds
off GDP. The biggest weakness of HDI, in my opinion,
is that it does not measure happiness. Happiness
is the core of an individual’s well-being.
Economists, who have traditionally opposed measuring
well-being, are changing their attitude based
in large measure on path-breaking work being conducted
by Daniel Kahneman of Princeton University. Kahneman,
a psychologist who was awarded the Nobel Prize
in Economics in 2002, asserts that national well-being
can be measured by aggregating measures of individual
well-being.
Kahneman bases his measure of national well-being
on how people feel about each of several routine
daily activities, such as socializing, praying,
eating, sports, commuting, and shopping. This
approach calls for conducting two sets of surveys.
One set would measure how much time individuals
spent on various daily activities. A second set
would measure how much satisfaction they derived
from these activities by quantifying the “net
affect” of each activity. The net affect
is defined as the average of three positive adjectives
(enjoyment, warm, happy) less the average of five
negative adjectives (frustrated, depressed, angry,
hassled, criticized).
The results are aggregated over a representative
sample of individuals to derive an estimate of
“per capita” well-being. When multiplied
by the population, one obtains an estimate of
national well-being. Kahneman argues that the
goal of public policy should be to maximize national
well-being rather than GDP.
As of now, Kahneman’s measure has only been
quantified for the US in an illustrative mode.
However, a team of researchers led by Ronald Inglehart
of the University of Michigan has quantified a
related concept through a series of national surveys.
Their findings are stored in a database called
World Value Surveys (WVS, http://wvs.isr.umich.edu/).
The work builds on surveys that were first carried
out in Europe in 1981. A second wave of surveys,
designed for global use, was completed in 1990-1991;
a third wave was carried out in 1995-1996; and
a fourth wave took place in 1999-2001.
The most recent WVS assessment was released last
year and includes data for 2002. It includes data
on 81 countries. Puerto Rico and Mexico top the
list, with scores above 4.0. The US ranks 15th,
with a score of 3.47. Iran has a score of 0.93
and Turkey a score of 0.84.
Among South Asian countries, Bangladesh has a
score of 0.54 and India a score of 0.03. Pakistan
shows up with a value of negative 0.30. In most
societies, those who describe themselves as happy/satisfied
outnumber those who describe themselves as unhappy/dissatisfied
and the score is a positive number. In the case
of Pakistan, the opposite is true.
While Bhutan was not ranked in the WVS study,
it is perhaps the only country in the world that
has built happiness into the core of its development
strategy. Ever since the current king ascended
the throne in 1972, Bhutan has focused on measuring
and maximizing “Gross National Happiness.”
One measure of success is that all of Bhutan’s
students who go on overseas scholarships return
home, citing improvements in education, health
care and the environment. Tashi Wangyal, who recently
returned home with a master’s in philosophy
from Cambridge, England, said that “the
more I traveled and lived abroad, the more I learned
to appreciate what we had at home.”
People are puzzled by this finding, since Bhutan
has a low level of per capita income. However,
researchers have concluded that higher incomes
are by no means a guarantor of higher happiness.
In the case of Japan, the development of income
and happiness diverge like open scissors. Between
1958 and 1991, income per capita in Japan rose
by a factor of six, perhaps the most spectacular
growth in affluence in any country since World
War II. However, this tremendous rise in material
well-being was not accompanied by an increase
in average satisfaction with life, which stayed
unchanged at 2.70 on a scale of 1 to 4 (very satisfied).
Ed Diener, a psychologist at the University of
Illinois, reports similar results. He has analyzed
150 studies on wealth and happiness in his report,
“Beyond Money: Toward an Economy of Well-Being”
and concluded while “economic output has
risen steeply over the past decades, there has
been no rise in life satisfaction.”
People’s happiness is also influenced by
the kind of political system they live in. This
is borne out by analysis of data across 38 mainly
developed nations at the beginning of the 1990s.
Citizens in a democracy are likely to be happier
because they can vote poor leaders out of office
while those in a dictatorship can’t.
In 2002, only 10 percent of Pakistanis said they
were satisfied with their lives as a whole—which
was the lowest percentage in a survey of 80 countries.
Only one of five persons described themselves
as “very happy.” These are depressing
results and are at odds with the rosy impression
created by the government’s parade of rising
macroeconomic indicators. The generals have failed
to improve Pakistan’s national well-being,
which remains in critical condition.
-------------------------------------------------------------------------------------
