Politicians should consider "wellbeing" as well as the economy when making policy, according to a commission led by the former head of the civil service Gus O'Donnell.
The former cabinet secretary said that GDP alone was "not enough" to measure a country's progress and that policymakers should look at how happy people are with their lives.
In a report for the Legatum Institute think tank Lord O'Donnell's commission suggested changes in the way countries run their health, education and economic policies in order to improve the general level of public wellbeing.
Setting out the limits of using a purely economic measure of progress Lord O'Donnell wrote: "Not only does GDP fail to reflect the distribution of income, it omits intangibles, or feelings, that are not easily reducible to monetary values.
"There is growing recognition that the measures of a country's progress need to include the wellbeing of its citizens."
The commission suggested that a stable rate of growth should be a government's prime objective, even if it meant reducing the overall rate of increase in the size of GDP, because it reduces the risk of volatility and research shows that a fall in income lowers wellbeing more than an equal rise in income increases it.
The commission recommends that people with depression or anxiety should have access to treatment on exactly the same basis as people with physical illness.
It suggests that parents should be offered classes to cover the emotional and physical aspects of child rearing.
They should also be taught about emotional impact of children on the couple's relationship and be offered therapy if they fall out.
The commission's report recommends that schools should help build character, teaching "soft" skills to improve children's "empathy and resilience".
Lord O'Donnell said: "GDP alone is not enough. To measure a country's progress, we also need to look at how satisfied we are with our lives and how worthwhile our lives are. Our report shows how to do this: how to measure wellbeing, how to analyse it and how to act on it.
"We show how governments and individuals can use this information to make better decisions and ultimately a better society."
Prime minister David Cameron has long been a supporter of the idea of measuring happiness, saying in 2006: "It's time we admitted that there's more to life than money, and it's time we focused not just on GDP, but on GWB -- general well-being.
"Well-being can't be measured by money or traded in markets. It's about the beauty of our surroundings, the quality of our culture and, above all, the strength of our relationships.