Although the term “economics of happiness” was conceptualised over half a century ago, it continues to pose an intellectual paradox for many. I first came across it in 2014 during my Erasmus exchange semester at Poland’s famous Poznan University of Economics and Business to fulfil my German MBA requirements. I was surprised to find the university offered an entire course on this fast-growing field.
In simple terms, the economics of happiness studies how money and wealth affect our overall life satisfaction. Rather than judging a country’s success purely by its financial output, or GDP, the field asks what actually makes people happy. Is it health, relationships, job satisfaction, free time, or perhaps all of the above? It challenges the traditional focus on GDP by putting well-being, mental health, and social connection on equal footing with material wealth.
Contemporary experts are quietly challenging the global focus on GDP as the best way to measure national progress. For decades, governments assumed that a larger economic output naturally led to happier citizens. Yet, the contemporary realities of development tell a radically different story. While global wealth surges, it leaves behind an unsettling trail of rising inequality, chronic anxiety, and profound social alienation, even within the most affluent societies. This glaring divide reveals a fundamental truth: economic growth is merely a vehicle, not the finish line. If an expanding economy leaves its populace feeling deeply anxious, precarious, and left behind, it cannot be classified as a complete success.
This very conflict sits at the centre of the economics of happiness—a discipline perfectly captured by the famous Easterlin Paradox. In 1974, economist Richard Easterlin observed that while wealthier citizens within any given country are generally happier than their poorer counterparts, a nation’s average happiness remains largely stagnant over decades of continuous macroeconomic growth. Two powerful psychological and social forces drive this phenomenon. First, humanity adapts rapidly to material improvements—a phenomenon psychologists term the “hedonic treadmill”. A pay raise or a new phone gives a quick burst of joy before quickly becoming the new normal. Second, human well-being is heavily contingent upon relative status. In an interconnected world dominated by digital comparison, individuals judge their success against neighbours, peers, and idealised digital lives. If everyone gets a raise at the same time, no one feels they have actually moved ahead, and the anticipated psychological reward of making more money evaporates.
For a growing economy like Bangladesh, this paradox is an urgent policy problem, not just a theoretical debate. The World Happiness Report 2026 highlights this reality by placing Bangladesh 127th out of 147 nations. Even though this is a small improvement from its 134th position in 2025, Bangladesh still ranks behind South Asian neighbours like India, Pakistan, and Nepal. Rather than looking only at GDP, this global index measures overall progress by tracking social support, healthy life expectancy, institutional trust, and personal freedom. In Bangladesh, low satisfaction scores are directly tied to ongoing issues like systemic corruption, high inflation, youth unemployment, and limited personal freedom.
The structural divergence between economic metrics and real life is starkly evident in our urban landscapes. Over the past 30 years, Bangladesh has constructed a genuine macroeconomic success story characterised by healthy GDP growth, expanding electricity grids, upgraded rural connectivity, and a significant reduction in extreme poverty. This output-focused model has simultaneously extracted a severe human toll. The modern Bangladeshi urban experience is defined by the punishing, hours-long gridlock of Dhaka’s traffic, hazardous levels of air pollution, skyrocketing living costs, and profound job insecurity within a massive informal economy. Traditional economic indicators capture the value of the concrete poured for new roads, but they completely fail to register the mental exhaustion of the daily commute, the toxic smog blanketing our cities, or the pervasive anxiety regarding next month’s rent. Money is still essential for poor people because a small raise directly reduces their daily suffering and hardship. Nevertheless, once fundamental survival thresholds are achieved, marginal increments in financial capital yield progressively diminishing returns on subjective well-being.
To close this gap, Bangladesh needs to change its focus from basic economic growth to building a society that values real human well-being, just like other progressive nations do. For example, the United Kingdom formally tracks national well-being, the OECD uses a “Better Life Index,” and Bhutan has long used Gross National Happiness. For our policymakers, this evolution requires executing specific, localised structural interventions across the following four critical pillars.
First, urban planning must prioritise human time and public health over unmanaged congestion. Transforming Dhaka and expanding divisional cities requires massive investments in high-capacity public transit, decentralised commercial zones to reduce long-distance commuting, and the strict enforcement of air quality standards to mitigate the unseen tax on public health. Second, the government must protect workers’ dignity and financial safety. Giving garment and informal workers secure contracts, safe workplaces, and fair wages will drastically lower the daily stress that causes national anxiety. Third, public health policy must treat mental health with the same urgency as physical ailments. Integrating robust psychological counselling into primary healthcare centres and community clinics will address one of the most powerful, yet neglected, predictors of human well-being. Finally, dismantling systemic corruption and expanding personal freedoms are essential to restoring institutional trust, ensuring citizens feel safe, valued, and empowered in their daily choices.
Raw economic growth can no longer be treated as our ultimate finish line. By shifting our national focus towards the human factors that enrich daily life—prioritising fair distribution, mental well-being, liveable cities, and social trust—Bangladesh can finally break free from the trap of outdated metrics. The real measure of our country’s progress must be how safe, strong, and content our people feel. We must build a society that is not just richer, but deeply and lastingly happier.
Rifat Ibne Jamal is a retired military officer, currently working as the deputy general manager for a major conglomerate. He can be reached at [email protected].
Views expressed in this article are the author’s own.
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