New Zealand wants to make people happy, not rich - will it work?

New Zealand’s latest budget, unveiled this week, is being touted as the first in a Western country to put well-being over economic pressures.

The country’s prime minister Jacinda Ardern promised billions of dollars in additional funds to address mental health problems, suicide and child poverty. Almost NZ$2 billion is earmarked for mental health services, following yet another year of the country having the highest teen and young adult suicide rates in Western countries.

As well as boosting existing mental health services, more money will be used to help people with mild or moderate mental health issues before they become an emergency.

Almost NZ$200 million will go to an initiative to provide long-term shelter for people who are homeless, with no strings attached, and more than NZ$1 billion to addressing child poverty.

“Today we have laid the foundation for not just one well-being budget, but a different approach for government decision-making altogether,” Ardern said while unveiling her budget.

The goal is to downplay the importance of gross domestic product (GDP), a measurement of country’s economic activity that is normally seen as a key indicator of success. But despite what Ardern and her team suggest, no budgets are solely about GDP.

“All budgets in pretty much all developed countries are well-being budgets,” says Arthur Grimes of the Motu Economic and Public Policy Research Trust, New Zealand. He notes that the definition of well-being is welfare, and virtually every budget allocates money to services such as poverty, mental health and housing.

Grimes is also sceptical about how well-being will be measured, with around 60 different indicators proposed. “In my view that’s a really scattergun approach,” he says.

Child poverty is the only metric being tracked, he says, making it difficult to assess whether the budget will achieve what it is designed to do.

One way of tracking well-being is to ask people how they rate their lives overall. But a limitation is that it might take several years for policies to shift the population’s aggregated well-being up or down compared to other countries – beyond the short time-frame politicians operate in.

Nevertheless, the government could still use these self-reported questionnaires to assess specific interventions, for example, someone’s well-being before and after they move into public housing, Grimes suggests.

New Zealand is actually not the first country to prioritise well-being. The Kingdom of Bhutan has discussed the need to value happiness over economic growth since the 1970s, and made it official with its “gross national happiness index” in 2008.

The French launched a well-being framework following a 2009 report commissioned by then-president Nicholas Sarkozy, that led to ongoing tracking of “new indicators of wealth”. These include poverty, education, healthy life expectancy, income inequality and carbon footprint.

The UK also had a short-lived attempt at bringing well-being to the forefront under former prime minister David Cameron. While it hasn’t overtaken GDP in budget discussions, the UK’s Office for National Statistics continues to track well-being, giving useful insights into the population’s life satisfaction, happiness, employment levels and more.

Perhaps the key difference is that New Zealand says it is placing well-being at the heart of the budget. It might take many years for the machinery of government to come around to it, but the reframing of a country’s success could start there.