Beyond-GDP indicators
Genuine Progress Indicator (GPI)
An alternative to GDP that adjusts personal consumption for inequality and adds or subtracts environmental and social costs and benefits — such as pollution, unpaid work, and resource depletion.
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
construction and lineage
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.
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