Beyond-GDP indicators

Genuine Progress Indicator (GPI)

Meaning statusEstablishedSource recordDirect document linkedWhy these are different

Definition

The Genuine Progress Indicator is a composite economic indicator that starts from personal consumption expenditure and adjusts for income distribution, then adds estimated values of non-market benefits (such as household and volunteer work) and subtracts environmental and social costs (such as pollution, resource depletion, crime, and loss of leisure). It descends from the Index of Sustainable Economic Welfare developed by Daly and Cobb in 1989.

References

ScienceDirectDesign and meaning of the genuine progress indicator (from Daly & Cobb's 1989 ISEW to national studies; composite of economic, social and environmental adjustments)

construction and lineage

Harvard ADSEconomics of the Genuine Progress Indicator (GPI incorporates environmental, social and economic costs of GDP growth)

rationale

Overview

What it means

GDP counts activity, not welfare: cleaning up an oil spill raises GDP. GPI asks whether growth actually improved lives. In several countries where it has been estimated, GDP per capita has risen while GPI stagnated or fell — the "threshold hypothesis" that beyond a point, growth's costs exceed its benefits.

How it is used

Researchers and some governments (notably US states such as Maryland and Vermont) compute GPI to test sustainability of economic performance; it is a leading example in beyond-GDP debates.

Why it matters

GPI demonstrates concretely that an alternative national accounts headline is possible, and its divergence from GDP is core evidence in the case for wellbeing-based policy. **Note:** 1167 Beyond GDP-related reasoning connects to this entry; GPI is one of its flagship indicators.