Alternative measures of social welfare (e.g., Genuine Progress
Indicator, GPI)
Introduction:
Gross Domestic Product (GDP) is often used by
politicians and economists to estimate society's well-being.
Unfortunately, GDP is misused for this purpose - it fails to
separate spending on economic 'goods' that improve quality of life from
'bads' like pollution and disaster cleanup. GDP ignores our
natural wealth, and in fact can grow when we convert natural capital
(e.g., forests) into built capital (e.g., timber) even if this leaves
society poorer in the long run.
By contrast, the Genuine Progress Indicator (GPI, as well as the
closely related Index of Sustainable Economic Welfare or ISEW) accounts
for economic, social, and environmental factors, showing that more
material consumption is not always a good thing if it undermines our
long-term quality of life. GPI studies have been completed for
about two dozen countries and regional or local jurisdictions.
My primary research interest includes use of GPI at local and regional
scales to identify the 'winners' and 'losers' in globalization and
urban sprawl. I recently completed a GPI study of six rural
counties in northern Vermont, which was a companion paper to an earlier
piece that estimated the GPI for Vermont, Chittenden County, and
Burlington.
GPI Links:
Redefining Progress, a San Francisco-based policy organization developing tools to measure the economy and environment.
The Gund Institute at the University of Vermont is researching the use of the GPI at local scales.
The Canadian Index of well-being is an effort to develop a nationwide, non-GDP based welfare measure.
A recent news article on the CIW from the Toronto Star.
The Pembina Institute has promoted use of the GPI in Alberta.
GPI Atlantic has done groundbreaking work in bringing GPI into public policy discussions for the Atlantic Maritime provinces of Canada.
GPI Pacific is moving forward with similar work.
The King of Bhutan has advocated an economic goal of maximizing "Gross National Happiness" for this nation rather than undirected GDP growth.
Other perspectives on GDP and GPI:
“there is a major flaw in measuring the quality and achievement
of life by the total of economic production – (GNP/GDP)
– the total of everything we produce and everything we do for
money.”
- John Kenneth Galbraith
“The welfare of a nation can scarcely be inferred from a
measurement of national income as defined (by the GDP)... Goals for
more growth should specify of what and for what."
- Simon Kuznets, an original architect of national accounting systems
"Too much and for too long we seem to have surrendered personal
excellence and community values for the mere accumulation of material
things. The Gross National Product... includes air pollution and
advertising for cigarettes, and ambulances to clear our highways of
carnage. It counts special locks for our doors, and jails for the
people who break them. (It) includes the destruction of the
redwoods and grows with the production of napalm and missiles and
nuclear warheads.
And if GNP includes all this, there is much that it does not
comprehend. It does not allow for the health of our families, the
quality of their education, or the joy of their play. It does not
include the beauty of our poetry or the strength of our marriages, or
the intelligence of our public debate, or the integrity of our public
officials. It measures everything, in short, except that which
makes life worthwhile, and it can tell us everything about America,
except why we are proud that we are Americans."
- Robert F. Kennedy
"Unfortunately GDP figures are generally used without the caveat that
they represent an income that cannot be sustained. Current
calculations ignore the degradation of the natural resource base and
view the sale of non-renewable resources entirely as income. A
better way must be found to measure the prosperity and progress of
mankind."
- Barber Connable, Jr., Former Republican Congressman and World Bank President
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For more information, contact kbagstad@uvm.edu