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The concept of gross national happiness or "GNH" was developed in an attempt to define an indicator that measures quality of life or social progress in more holistic and psychological terms than gross domestic product (GDP). - Source Wikipedia

The term "gross national happiness" was coined in 1972 by Bhutan's former King Jigme Singye Wangchuck, who has opened Bhutan to the age of modernization, soon after the demise of his father, King Jigme Dorji Wangchuk. He used the phrase to signal his commitment to building an economy that would serve Bhutan's unique culture based on Buddhist spiritual values. At first offered as a casual, offhand remark, the concept was taken seriously, as the Centre for Bhutan Studies, under the leadership of Karma Ura, developed a sophisticated survey instrument to measure the population's general level of well-being. The Canadian health epidemiologist Michael Pennock had a major role in the design of the instrument, and uses (what he calls) a "de-Bhutanized" version of the survey in his work in Victoria, British Columbia. Ura and Pennock have also collaborated on the development of policy screening tools which can be used to examine the potential impacts of projects or programs on GNH.

Like many psychological and social indicators, GNH is somewhat easier to state than to define with mathematical precision. Nonetheless, it serves as a unifying vision for Bhutan's five-year planning process and all the derived planning documents that guide the economic and development plans of the country. Proposed policies in Bhutan must pass a GNH review based on a GNH impact statement that is similar in nature to the Environmental Impact Statement required for development in the U.S.

The Bhutanese grounding in Buddhist ideals suggests that beneficial development of human society takes place when material and spiritual development occur side by side to complement and reinforce each other. The four pillars of GNH are the promotion of sustainable development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance. At this level of generality, the concept of GNH is transcultural—a nation need not be Buddhist in order to value sustainable development, cultural integrity, ecosystem conservation, and good governance. Through collaboration with an international group of scholars and empirical researchers the Centre for Bhutan Studies further defined these four pillars with greater specificity into eight general contributors to happiness- physical, mental and spiritual health; time-balance; social and community vitality; cultural vitality; education; living standards; good governance; and ecological vitality. Although the GNH framework reflects its Buddhist origins, it is solidly based upon the empirical research literature of happiness, positive psychology and wellbeing.

Qualitative and quantitative indicators

There is no exact quantitative definition of GNH but elements that contribute to GNH are subject to quantitative measurement. Low rates of infant mortality, for instance, correlate positively with subjective expressions of well-being or happiness within a country. (This makes sense; it is no large leap to assume that premature death causes sorrow.) The practice of social science has long been directed toward transforming subjective expression of large numbers of people into meaningful quantitative data; there is no major difference between asking people "how confident are you in the economy?" and "how satisfied are you with your job?"

GNH, like the Genuine Progress Indicator, refers to the concept of a quantitative measurement of well-being and happiness. The two measures are both motivated by the notion that subjective measures like well-being are more relevant and important than more objective measures like consumption. It is not measured directly, but only the factors which are believed to lead to it.

A second-generation GNH concept, treating happiness as a socioeconomic development metric, was proposed in 2006 by Med Jones, the President of International Institute of Management. The metric measures socioeconomic development by tracking seven development areas including the nation's mental and emotional health. GNH value is proposed to be an index function of the total average per capita of the following measures:

Economic Wellness: Indicated via direct survey and statistical measurement of economic metrics such as consumer debt, average income to consumer price index ratio and income distribution
Environmental Wellness: Indicated via direct survey and statistical measurement of environmental metrics such as pollution, noise and traffic
Physical Wellness: Indicated via statistical measurement of physical health metrics such as severe illnesses
Mental Wellness: Indicated via direct survey and statistical measurement of mental health metrics such as usage of antidepressants and rise or decline of psychotherapy patients
Workplace Wellness: Indicated via direct survey and statistical measurement of labor metrics such as jobless claims, job change, workplace complaints and lawsuits
Social Wellness: Indicated via direct survey and statistical measurement of social metrics such as discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, crime rates
Political Wellness: Indicated via direct survey and statistical measurement of political metrics such as the quality of local democracy, individual freedom, and foreign conflicts.

The above seven metrics were incorporated into the first Global GNH Survey.

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