Genuine Progress Indicator (GPI)

[rufuspollock]

Kick-off paper is (afaict) http://www.bioline.org.br/abstract?id=nd13075 (open access - cached copy):

Kubiszewski, Ida, Robert Costanza, Carol Franco, Philip Lawn, John Talberth, Tim Jackson, and Camille Aylmer. 2013. ‘Beyond GDP: Measuring and Achieving Global Genuine Progress’. Ecological Economics 93 (September): 57–68. https://doi.org/10.1016/j.ecolecon.2013.04.019.

Decent-ish write-up here: https://en.wikipedia.org/wiki/Genuine_progress_indicator

Executive Summary

• Essentially Daly's ISEW (index of sustainable economic welfare) renamed
• Takes "personal consumption expenditure" (core aspect of GDP) and then subtracts and adds stuff (largely to represent non-market goods and externalities) e.g. pollution, free education etc
• Main paper does not provide its source data or calculation code 😢 (or even define explicitly its methodology)
  • Wikipedia attempts to provide a summary of key inputs
• Still looking for other sources of data

Excerpts from the Paper

Nations need indicators that measure progress towards achieving their goals—economic, social, and environmental. Standard economic indicators like gross domestic product (GDP) are useful for measuring just one limited aspect of the economy—marketed economic activity— but GDP has been mistakenly used as a broader measure of welfare (Costanza et al., 2009; Stiglitz et al., 2010). GDP was never designed to measure social or economic welfare, and yet, today, it is the most com- monly used indicator of a country's overall performance (Kuznets, 1934; Marcuss and Kane, 2007; McCulla and Smith, 2007).

GDP's current role poses a number of problems. A major issue is that it interprets every expense as positive and does not distinguish welfare- enhancing activity from welfare-reducing activity (Cobb et al., 1995; Talberth et al., 2007). For example, an oil spill increases GDP because of the associated cost of cleanup and remediation, but it obviously detracts from overall well-being (Costanza et al., 2004). GDP also leaves out many components that enhance welfare but do not involve monetary transactions and therefore fall outside the market. For example, the act of picking vegetables from a garden and cooking them for family or friends is not included in GDP. Yet buying a similar meal in the frozen food aisle of the grocery store involves an exchange of money and a sub- sequent GDP increase. GDP also does not account for the distribution of income among individuals, which has a considerable effect on individual and social well-being (Wilkinson and Pickett, 2009).

A more comprehensive indicator would consolidate economic, envi- ronmental, and social elements into a common framework to show net progress (Costanza et al., 2004). A number of researchers have pro- posed alternatives to GDP that make one or more of these adjustments with varying components and metrics (Smith et al., 2013). Some have also noted the dangers of relying on a single indicator and have pro- posed a “dashboard” approach with multiple indicators.
One such alternative indicator that has been commonly used is the Genuine Progress Indicator (GPI). While GDP is a measure of current production, the GPI is designed to measure the economic welfare gener- ated by economic activity, essentially counting the depreciation of com- munity capital as an economic cost. The GPI is a version of the Index of Sustainable Economic Welfare (ISEW) first proposed in 1989 (Daly and Cobb, 1989). However, for the purposes of this paper we use GPI and ISEW interchangeably. GPI starts with Personal Consumption Expendi- tures (a major component of GDP) but adjusts them using 24 different components, including income distribution, environmental costs, and negative activities like crime and pollution, among others. GPI also adds positive components left out of GDP, including the benefits of volunteering and household work (Talberth et al., 2007). By separating activities that diminish welfare from those that enhance it, GPI better approximates sustainable economic welfare (Posner and Costanza, 2011). GPI is not meant to be an indicator of sustainability. It is a mea- sure of economic welfare that needs to be viewed alongside biophysical and other indicators. In the end, since one only knows if a system is sus- tainable after the fact, there can be no direct indicators of sustainability, only predictors (Costanza and Patten, 1995).

Methodology

• Calculate for 17 countries with good data
• Then extrapolate to the rest of the world (less about being precise and more about trends)
• AFAICT no dataset provided

We performed a metadata analysis on the existing peer-reviewed literature that calculated time series GPI/capita and ISEW/capita at the national level. We found studies for 17 countries, for portions of the period between 1950 and 2010. However, methodological differences existed within the primary studies. For instance, many GPI studies used the Gini coefficient to estimate the inequality index. The U.K. and Swedish studies used the Atkinson index directly to estimate welfare loss. Some studies count cumulative GHG emission damage; others do not. However, we aggregated these studies with the assumption that they were sufficiently comparable on the basis that the underlying methodologies were similar.
We also assembled data on GDP/capita, HDI, Ecological Footprint/ capita, and Biocapacity/capita, for these 17 countries and the Gini coefficients and Life Satisfaction for a subset.

Results