Genuine Progress Indicator

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URL = http://www.rprogress.org/sustainability_indicators/genuine_progress_indicator.htm

Description

The GPI is an alternative accounting system that internalises what are normally considered externalised costs. The result is, ideally, a measurement system that accounts for the true and full values - positive and negative - of activity inside a given economic system.


Characteristics

Craig Neilson:

"Income Distribution: GDP can show how the total personal income of a nation grows - but not how the income is distributed. What's unwritten here is that a wide income distribution is favored by the measurement system - a good thing for the left but maybe not something everyone can agree on (yet).

Housework, Volunteering, and Higher Education: Since GDP only measures monetary trade, it ignores the value of un-paid work entirely - some of the most significant work to drive society like household work. With the emerging tools of Web 2.0 and increased online participation (most of it for no pecuniary gain), this sector of the economy will only become more valuable in the coming decades.

Crime: Violence that results in hospital bills is good for the economy, or at least, leads to a greater GDP. Proponents of GPI say that crime-related growth is not valuable, and don't count it as positive in GPI measurements.

Resource Depletion: If today’s economic activity depletes the physical resource base available for tomorrow, then it is not creating well-being; rather, it is borrowing it from future generations. The GDP counts such borrowing as current income. The GPI, by contrast, counts the depletion or degradation of wetlands, forests, farmland, and nonrenewable minerals (including oil) as a current cost.

Pollution: Pollution is one of the most common examples of the GDP system's failure, and in fact benefits twice from pollution. In the event of an oil spill, GDP systems appear to benefit first by having a tanker there in the first place, then secondly by spending money cleaning up the mess it leaves behind. Proponents of a GPI system say that cleaning up should be counted as a positive - but that its creation in the first place can only be negative.

Long-Term Environmental Damage: Coal mines are difficult to return to their previous (usually forested) state. GPI systems do not allow the creation of coal mines to add value, since they destroy pieces of the environment that may never be restored.

Changes in Leisure Time: Since leisure time has no economic value to GDP, it can go completely un-noticed. Under a GPI system, leisure time can be valued appropriately.

Defensive Expenditures: The GPI counts defensive expenditures as a cost rather than a benefit - a debatable presumption, but one that aims for a better world.

Lifespan of Consumer Durables & Public Infrastructure: One massive criticism of GDP is that it encourages products that break and get replaced (by more products that break). Instead, the GPI considers the lifetime of an appliance, tool or other such "durable" to be an indication of its quality, and values high quality infrastructure and goods favourably against those that would fail us. Why would we want a system that encouraged poor stuff?

Dependence on Foreign Assets: I'm not sure what I think here - because I'm in to globalisation. The idea is that borrowing money from other countries is living beyond your means - but if these loans are paid back with interest... it might be one of the few cases of where our existing monetary infrastructure (at least systemically) works. (International loans are often made with unfair conditions, but that's another story)" (http://www.worldchanging.com/archives/007993.html)


More Information

* Paper: Beyond GDP: Measuring and achieving global genuine progress. By Ida Kubiszewski, Robert Costanza et al. Ecological Economics,

URL = http://dx.doi.org/10.1016/j.ecolecon.2013.04.019

Robert Costanza:

“recent paper that calculates a global GPI (Genuine Progress Indicator). GPI takes income distribution into account, along with household and volunteer work and the costs of natural, social, and human capital depletion. This is the first synthesis of national GPI studies to get a global estimate.

We got some pretty interesting results showing that global GPI/capita peaked in 1978. This means that globally the external costs of economic growth have outweighed the benefits since 1978. We also found that globally, GPI/capita does not increase beyond a GDP/capita of around $6,500/capita.

Directory

Other alternative metrics:

  1. Inclusive Wealth - Metric
  2. Gross National Happiness
  3. Alternative Measures of Human Well-Being
  4. P2P Metrics