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I n most countries, progress is measured in terms of GNP or GDP — gross national or domestic product. But one small country has adopted a startlingly different yardstick. In 1972, the king of Bhutan declared that progress in the landlocked Himalayan mini-kingdom would henceforward be gauged in terms of GNH — gross national happiness.

The king was not joking. Contentment, not capital, became Bhutan’s official priority. As indicators of national well-being, profits, losses, surpluses and deficits were folded into just one of four “pillars of gross national happiness” — and even then with key qualifications. Thus, in his annual report to the National Assembly, the Bhutanese prime minister testifies not just about “equitable and sustainable” socioeconomic development, but also about “preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance.”

Bhutan might seem an odd place for a revolutionary social philosophy to bubble up. About the size of Switzerland, it boasts fewer than a million people. Already isolated by geography, it has locked in its image as an enigmatic Shangri-La by tightly controlling access. Fewer than 6,000 tourists visited the hard-to-get-to nirvana last year, most of them via Druk Air, one of the world’s smallest national carriers (according to Bhutan’s official Web site, it boasts “a fleet of two BAe-146 aircraft.”) It’s the kind of place that celebrates “Wood Male Monkey Year.” The temptation is strong to see GNH as just another charming expression of Bhutanese eccentricity.

Yet, instead of amusement, the king’s Buddhist-inspired decree sparked real interest among economists and other social scientists abroad — interest that has since blossomed into full-blown theoretical research. In February, Bhutan hosted the first major international conference on GNH, attracting academics and journalists from some 20 countries. This month, the Center for Bhutan Studies published essays by 45 of the participants, ranging from doctors and lawyers to environmentalists and Buddhist monks, in a hefty volume titled “Gross National Happiness and Development.”

In promoting what E.F. Schumacher called “economics as if people mattered” (the subtitle to his influential 1973 book, “Small is Beautiful”), Bhutan is putting into practice a philosophy that some economists now see as a promising alternative to market fundamentalism. It is not so much antidevelopment — or even antiglobalization — as it is probalance. One Bhutanese scholar caught its essence in an inspired image, explaining that GNH does not mean rejecting modern advances, including education and technology, in the name of tradition, but figuring out how to place “the hamburger of modern development in the Bhutanese mandala.”

For Bhutan, this might mean opening the door to fast food, television and the Internet while at the same time preserving and celebrating — as the country tries hard to do — its cultural and spiritual heritage and its superb environment. Its small size and physical isolation make the task easier. But what might GNH mean for larger, more developed countries such as Japan?

According to Ed Diener, an American professor of psychology who has taken an interest in the approach, the first thing that is required is “a huge shift in the way policymakers think.” Instead of merely considering economic indicators as a measure of national progress, governments would have to get used to the idea of factoring in both social indicators, such as education, health care and the state of the environment, and much more subjective measures of what Mr. Diener calls “life satisfaction.”

It’s the third part, of course, that is the challenge. Most governments do pay attention to education and health care, albeit sometimes reluctantly, since such matters influence votes. But what does life satisfaction consist of, and what can policymakers do to promote it?

The trick, according to Western proponents of GNH, is to focus on redressing the often deleterious side effects of too narrow a concern with economic progress. Promote appreciation of the importance of work conditions, vacation, leisure time and child care. Take into account the social value of volunteer work. Offset assessments of industry profits with an honest accounting of the losses due to environmental degradation. Broaden the definition of the bottom line, they say, and the bottom line as traditionally understood will probably even benefit, since a happier, healthier workforce should prove more productive.

Thirty-two years into its grand experiment, Bhutan has become a beacon for intellectuals as well as hikers and hippies. Maybe it should consider adding a third plane to its national fleet.

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