Even though GDP -- Gross Domestic Product -- has been castigated as a misleading statistic for years, it continues to be cited by politicians, economists and the press as a generally accepted proxy for societal progress. The investor class has a big stake, after all, in conflating “the economy” with “human well-being.”
What if it were shown that intensified market activity isn’t such a boon to humankind, after all? That seems to be the goal of such alternative indices as the Gross National Happiness index (Bhutan), the Human Development Index (UNDP), the Happy Planet Index (New Economics Foundation), OECD Better Life Index, among others.
It is also the goal of the goal of the Genuine Progress Indicator, or GPI, a new metric that is explored in great detail by Ida Kubiszewski, Robert Costanza and a team of other economists in an April 30 paper in Ecological Economics. Kubiszewski et al. make a rigorous attempt to estimate net social welfare by taking into account all sorts of factors that GDP ignores.
The GPI still relies upon “personal consumption expenditures,” as does GDP, but GPI goes much further by taking into account such factors as income distribution, environmental costs, and the presence of crime and pollution. The idea is to measure the depletion of “natural, social and human capital” that economic activity entails. The GPI also seeks to measure positive factors in human well-being such as the benefits of volunteering and household work, and self-reported “life satisfaction.” All told, the GPI uses 24 different component metrics.