The question of what constitutes happiness and well-being, and how to measure it, is generally very central to our discussions here at THNK. The New Economics Foundation's Happy Planet Index came into being as a result of precisely our concerns (and many others', without a doubt) about the hugely limited notions of progress based in finance and economics. Just recently, Nic Marks presented the ideas underlying the Happy Planet Index at TED. An inspirational online talk resulted.
The New Economics Foundation designed the Happy Planet Index based on the idea that people should be happy and the planet should be happy, but traditional measures of progress do not show this. The only widely accepted notion of progress is based on a financial and economic definition of what progress is. It is based on the assumption that somehow, if we get the right numbers to go up, we will be better off and our lives will get better.