Genuine Progress Indicator

Discussion in 'The Environment' started by HuckFinn, Jun 17, 2004.

  1. HuckFinn

    HuckFinn Senior Member

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    This is an interesting alternative to gross domestic product (GDP) as a measure of national well being:

    http://redefiningprogress.org/projects/gpi

    (It's noteworthy that the GPI peaked in the mid-1970s, just like rock music did!)
     
  2. MaxPower

    MaxPower Kicker Of Asses

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    I doubt the GDP scale will be discontinued anytime soon, but this also gives a lot of information that could be overlooked otherwise like extra spending caused by debt, inflation, and such.
     
  3. sreed24

    sreed24 Member

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    I work in economic statistics for a living, and was curious about this and took a long look at it. It is absolutely true that GDP leaves a lot to be desired as a measure of standard of living and genuine economic progress.



    Briefly, my thoughts are these:



    -It's a very ambitious effort.



    -Most of it is well conceived and sensible.



    -However, there are a few serious flaws.



    -These flaws are so glaring that I would imagine they prevent the index from being taken seriously by many.



    Here is the report I read:



    http://www.redefiningprogress.org/publications/pdf/gpi1998_data.pdf



    The basic structure of the index is to take GDP and add to it some things that GDP omits but that do affect our quality of life and subtract some things that GDP includes that do not improve our quality of life. In constructing such an index there are tow basic problems: What do you adjust for and how do you quantify the adjustments. I am going to make a few sharp criticisms but I want to stress that I was largely impressed by the quality of the work. Most of the adjustments were both sensible in themselves and seemed to be quantified in a reasonable way.



    However, the authors or authors throw in a couple of real stinkers that make me question their objectivity and expertise.



    The authors attempt to estimate the costs of family breakdown. When I came to that section I was anxious to see how they would tackle that. They attempt to estimate the cost of divorce-I am a little dubious of some of their methodology, but it wasn't too bad. To my dismay, though, their other method of family breakdown was...hours spent watching television (!?).



    Say what?



    Their discussion of this particular feature is hardly persuasive and reeks of what I'm afraid is the real story: The authors simply don't much care for TV and want to factor it into their measure. Worse yet, they simply pull a number out of the air as to what the social cost of television watching is.



    One is entitled to their own value judgment as to the pernicious effects of TV on our society, but in constructing what is supposed to be an objective economic measure such judgment has no place. Crime and environmental degradation are objective ills; TV is simply not.



    The best that can be said for this adjustment is that it is relatively small compared to the index as a whole. I can't imagine why the authors include it at all since omitting it would certainly improve their credibility and not really affect their conclusions.



    The other adjustment I have a serious disagreement with is their adjustment for "loss of farmland." The idea is that when land is developed it can't be used for agriculture anymore, and they consider this a loss. This argument has dubious economic merit. I see no reason that whenever land is used for one economic purpose instead of another that the value of the previous use of the land be subtracted...if one is going to do this for the conversion of farmland to developed land one should just as well do it for every other change. And since the proportion of land needed by the U.S. to produce our food has been in constant decline for centuries I find the ruing of the loss of farmland particularly strange. I suspect that the authors basically were using this as a way to quantify the loss of "open space." It's fair enough to consider the loss from development impinging on our enjoyment of nature and open space but this is no way to quantify it.



    Finally, let me say that the authors made several large environmental adjustments which I found conceptually valid but I lacked the expertise to judge their methods of quantifying.



    All this said I appreciated this data and the work put into it. I think it is a useful effort.





     
  4. HuckFinn

    HuckFinn Senior Member

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    Thanks for the thoughtful feedback, Sreed. I agree with you about the TV thing, but I'm a bit more sympathetic to the concept of counting loss of farmland as a negative. While modern farming techniques might require less land for cultivation, I think the true "footprint" has to account for all the industrial inputs (chemicals, water, fuel, etc.)

    I'd be interested in your comments on the "ecological footprint" formulation. It can be found on the web page I cited above, on the left hand side, under the "projects" heading.
     

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