What’s the point?

1978 was a good year…

“1978 was a good year; I wasn’t earning much but I felt happier.” That’s what your average global citizen might say after reading Kubiszewski et al. 2013.

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. A more comprehensive indicator would consolidate economic, environmental, and social elements into a common framework to show net progress. 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 generated by economic activity. A group of some of the world’s top economists have compared GPIs from all around the planet and found:

1. Global GPI/capita peaked in 1978. 2. Globally, GPI/capita does not increase beyond a GDP/capita of around $US 6,500/capita. 3. With more equitable distribution, current world GDP ($67 trillion/yr) could support 9.6 billion people at $7,000/capita. 4. Life satisfaction in almost all countries has also not improved significantly since 1975.

Reference

Kubiszewski I, R Costanza, C Franco, P Lawn, J Talberth, T Jackson & C Aylmer (2013). Beyond GDP: Measuring and achieving global genuine progress. Ecological Economics 93: 57-68.

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