Economics: Is a country truly wealthy if it has high GDP, but its citizens are unhappy?

Note: The following article was written by Zain Khwaja L6B (20khwajaz@students.watfordboys.org)

Online figures have claimed there are seven types of wealth: spiritual, mental, physical, social, influential, community, and generational. I believe this framework is much too complicated. When looking at countries, both historically and in the present, wealth can be understood through three broader dimensions: material resources, human wellbeing, and social power.

In a perfectly theoretical society, it would be almost impossible to have one of these without the other two. For example, a country with a high GDP will likely have greater material resources, which citizens can use to improve their wellbeing through things such as healthcare, education, leisure, or even gym memberships. Material wealth can also provide access to corridors of social power.

Yet there are two key hindrances to the idea that high GDP automatically enables wealth in all aspects of life, and therefore complete happiness rather than happiness in only one area, such as earning a high salary while being overworked.

The first is the imperfection of economic systems, whether free markets or command economies, an idea also closely connected to the significance of leaders and governments, who make decisions on behalf of the citizenry. Governments are not infallible, and they may compromise the optimal use of resources generated by high GDP. This limits the tangible happiness citizens actually gain from national wealth.

The second is the imperfection of the measure of GDP itself, especially when looking at aspects such as time, representativeness, quality and externalities.

In order to illustrate the cogency of these two hindrances, I will first examine the Soviet Union, before considering modern-day South Korea. Although vastly different societies, together they demonstrate that high economic output alone is remarkably insufficient to create genuine national happiness, and thus insufficient to create true and holistic wealth.

In the 1930s under Joseph Stalin, the USSR saw significant growth in GDP, which itself saw large weaknesses such as a failure to balance the economy and significant underprovision of consumer goods damaging wealth prospects. Yet, it wasn’t really until the 1960s that the USSR rose up the GDP rankings globally, and under Leonid Brezhnev occupied the number two position globally in terms of GDP, behind the USA. It is clear thus that the USSR was quantitatively wealthy looking at GDP alone, yet the USSR exemplifies the importance of both the aforementioned hindrances when evaluating the effectiveness of GDP as a measure of wealth.

First, the nature of the USSR being a centrally planned economy meant that it suffered from the woes of the Marxist system, especially information gaps and a lack of innovation. This was worsened under Brezhnev, whose ‘trust in cadres’ approach allowed for party officials to enjoy long, unbroken tenures, reducing the push for innovation and creation economically and politically. While this may have increased political stability, such a lack of state-sponsored innovation massively reduced long-run GDP and growth prospects, contributing to the eventual collapse of the Soviet economy and indeed negative GDP growth under Gorbachev in the late 1980s.

Secondly, the USSR had high total GDP partly because it had scale, population, resources and military-heavy production, yet that did not mean ordinary citizens had wellbeing, choice, or consumer prosperity. Indeed, by 1965 male life expectancy had begun to decline and infant mortality rates rose from the 1970s owing to the underprovision of healthcare. The USSR also faced significant problems regarding alcoholism, with consumption increasing by 400% from 1950-1980 while the population rose by just 25% in that time period. Even environmentally, negative externalities were frequent and immense such as Chernobyl (1986), Kyshtym (1957) and persistent contamination of the Aral Sea.

Thus, the USSR offers an almost perfect example of the severe imperfections of GDP as a measure of wealth. It highlights how despite high GDP, realised benefits to the citizenry can be squandered by poor government and an over-prioritisation of certain areas such as defence rather than consumer goods which actively improve one’s material resources.

Additionally, it highlights the immense weaknesses of GDP as a measure of quantifiable wealth of a country as a whole. The USSR’s high population, immense externality damage and limited high-quality social provision resulted in a GDP figure that exaggerated the quality of life, and did not properly account for human wellbeing and social power, the latter of which was especially compromised when looking at the immense persecution of various value systems and religious identities in the USSR.

Now, looking at the question through a more contemporary lens, South Korea offers a less extreme yet equally clear argument regarding the fallibility of GDP as a measure of citizen wellbeing. Its growth in GDP and current economic position suggest a country in which the majority of citizens can enjoy significant material wealth, and thus as explained prior, significantly more social and personal wealth. In 2024, its GDP per capita reached about $36,239, and adjusted for purchasing power around $61,051, highlighting how for many financial barriers are less significant in the chase for wealth.

Yet, there are other barriers that result in South Korean citizens experiencing uniquely high levels of unhappiness. The demanding work culture and social pressure in South Korean societies has contributed to abnormally high suicide rates of 23.2 deaths per 100,000 people, over double the OECD average. It would be categorically inaccurate and insensitive to describe a country like South Korea’s as truly wealthy looking at GDP alone, as this would be dismissing what stats show is the true quality of life for thousands in the country.

Thus, it is clear that both historically and contemporarily, high GDP and the achievement of true multi-dimensional wealth have an evident, yet exaggerated, correlation. A state with a smaller economy in terms of GDP may still produce greater wealth across material resources, human wellbeing and social power if its output is distributed, experienced and sustained more effectively. GDP as a standalone measure of wealth is therefore highly ineffective, yet if paired with more qualitative measures like National Happiness Surveys, its effectiveness can be recovered as a contributor to wealth quantification.

Sources consulted

Bushnell, S. (2015) Communist States in the Twentieth Century. Pearson Education.
Used for background knowledge on the USSR, especially Stalin, Brezhnev, central planning, consumer shortages and social conditions.

Brainerd, E. (2006) Reassessing the Standard of Living in the Soviet Union. IZA Discussion Paper No. 1958. Available at: https://docs.iza.org/dp1958.pdf
Used for evidence that male life expectancy declined from 1965 and infant mortality rose from 1971, supporting the argument that Soviet GDP did not translate into wellbeing gains.

World Bank (2025) GDP per capita (current US$) – Korea, Rep. Available at: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=KR
Used for South Korea’s GDP per capita figure, showing its material wealth before comparing this with wellbeing indicators.

OECD (2025) Health at a Glance 2025: Korea. Available at: https://www.oecd.org/en/publications/health-at-a-glance-2025_15a55280-en/korea_40b1d2b4-en.html
Used for South Korea’s suicide rate compared with the OECD average, supporting the argument that high GDP can coexist with serious wellbeing problems.