You aren't the first to ask these questions... Problem is that things like tradition, happiness, etc are very difficult to measure, whereas economic activity is a bit easier. Therefore, there's been an assumption that if you just focus on the economics, the rest will follow. However, people have questioned this assumption quite a bit recently.
I can certainly relate to that. A perfect example is the kitchen gadget mania that has been going on for 20 years. It seems I obtained most of mine as Christmas gifts. The idea always seems appealing at first. "Hey, a battery powered potato peeler!" The problem is, you do not initially consider all that damn time wasted stacking, moving, cleaning, dropping on the floor, clanking around noisily... You reach into the cabnet and all these kitchen gadgets come flying out. At some point it becomes too much. The highest level of satisfaction comes when you decide to throw (or give) these things away, and I am sure this is true for most people.
Here's an article in line with the thread just out today: global study: money doesn't buy happiness http://news.yahoo.com/s/livescience/20101213/sc_livescience/globalstudymoneydoesntbuyhappiness
Great post by 1prometheus. This idea of equating GDP to the rise out of poverty and subsequent happiness for all has always been just too convenient for the few in control of the distribution of resources needed for development. Happiness and true wealth seem to be linked to self reliance and freedom (from debt, among others) along with many other non material items. It doesn't seem to be the common notion of how many $'s per day a family makes... as long as they can eat good everyday...