Policy makers and even the voting public make the mistake of thinking that growth in gross domestic product (GDP) is an indicator of societal progress. In reality, though, GDP is nothing but an indicator of national spending with no distinctions between those transactions that add to our well-being and those that diminish it.
- Chop the top off the mountain to take its coal, and you’ll get economic growth in the area. Question is, if you taint the water to the point where people can’t even touch it safely, can you call that progress? (By the way, there’s a great, new film on this subject called Burning Our Future)
- If community earnings rise 20%, but the time parents can spend with their children drops 40%, can you call that progress?
- If the washing machine industry grows by 20%, but that is because their products are engineered to last only 50% as long, can you call that progress?
All of these scenarios would contribute to a growth in GDP, but a decline in human happiness and well-being. That’s why Redefining Progress developed the Genuine Progress Indicator (GPI).
GPI starts with the same personal consumption data that GDP is based on, but then adjusts it by assigning monetary values to factors that affect human happiness and well-being. Those factors include, among others:
- The impact of economic growth on happiness, depending on how much of it actually ends up in the hands of the poor people who need it
- The amount of “leisure time” available within the culture for things like childcare, housework, volunteer work, etc.
- The negative costs of crime-associated legal fees, medical expenses and property damage. Perversely, an increase in crime, because of these costs, can actually increase the GDP, a clear case of economic growth not indicating an increase in happiness.
- The economic externalities like long-term environmental damage associated with carbon emissions, ozone depletion and deforestation.
The point is that if policy-makers adopted a metric like GPI, they would be guided toward adopting agendas that much more tightly focussed on the happiness of the electorate than on far-less-meaningful growth in the economy.
“We believe,” Redefining Progress says on its website, “that if policymakers measure what really matters to people—health care, safety, a clean environment, and other indicators of well-being—economic policy would naturally shift towards sustainability.”