Home > Economic growth, Genuine wealth, Politics > Maryland to use Genuine Progress Indicator in measuring progress: Is Happiness Really Priceless?

Maryland to use Genuine Progress Indicator in measuring progress: Is Happiness Really Priceless?

September 27, 2011 Leave a comment Go to comments

Jessica Pearce Rotondi: Is Happiness Really Priceless?

For regular readers of Earthgauge, you will know that I have often written of the need to make use of alternative economic indicators besides the GDP (Gross Domestic Product). The GDP is merely a measure of the total economic activity in a country and ignores whether such activity is good or bad for society as a whole. For this reason, more oil spills, litigation and increased cancer rates actually cause the GDP to go up.

This would be no big deal if economists and the media at large didn’t take the GDP so seriously and use it as the principal indicator of whether the economy is faring well. We hear ad nauseum that things are good when GDP growth is going up. When GDP is flat or, heaven forbid, going down, we are told the economy is in a sorry state indeed. Two consecutive quarters of negative GDP growth are, after all, the textbook definition of a recession.

The assumption is that people are suffering when the GDP is not growing and this may indeed be the case for some. But GDP growth does not necessarily indicate that we are any better off either. If we liquidate our forests, for example, the GDP would go up considerably at an obvious environmental and long-term cost. Rapid exploitation of the Alberta tar sands will also boost Canada’s GDP considerably without accounting for the environmental devastation taking place or the tar sands’ contribution to climate change.

There is a desperate need for additional economic indicators to give us a better picture of the true economic, social and environmental health of a nation. This is why I was very pleased to read this article in the Huffington Post today, which describes how the state of Maryland will start using the Genuine Progress Indicator (GPI) in addition to the GDP in assessing the economic health of the state. From the article:

Turning what “makes sense” in people’s life decisions into actual cents, GPI assigns a dollar value to things like housework, volunteering, and commute time, while subtracting from GPI the cost of crime, divorce, and water pollution. The goal of GPI is to look beyond bottom lines to take into account the many disparate economic, environmental and social elements that make up our lives and using that data as an indicator of social progress.

This is encouraging news indeed. We can only hope that Maryland’s adoption of the GPI is a measure that other jurisdictions will watch closely and soon follow.


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