GDP Growth Needs Replacing, But With What?

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Graph showing comparison of GDP against GRI Last week, while poking around a few dusty corners of the internet, I came across a small business future group which one person had left because of disagreement about the prominence of sustainability in the group’s charter.

This is a shame. Those who are facing up to the current challenges in business need to work together to find the solutions, not argue over the relative importance of their preferred approaches.

Then a post on World Changing caught my eye. “The Two Faces of Economic Reporting” points out that last week’s growth in US GDP growth was underpinned by the largest drop in personal income for over three years.

Whether you classify this as an issue of concerning sustainability, responsibility, society, business, the media, politicians or penguins is neither here nor there.

What does matter is that GDP is a niche indicator, measuring only the amount of money changing hands and nothing else. As the drop in personal income demonstrates, it is not an indicator of the economy’s overall health.

The author of the piece is Clark Williams-Derry, the research director for the Sightline Institute in Seattle. He goes on to comment:

It’s high time that reporters caught on to the new reality — GDP isn’t much of a bread-and-butter story anymore, and “economic growth” doesn’t mean what we think it does.

All of which begs the question, what should we use to measure our economic health? instead A variety of alternative indicators have been proposed, which one gets your vote?

Post your favourites below and if there’s enough I’ll post an article highlighting them!

Related Posts:
The Virtue of Conservation
Morality and Markets: The Depth of our Carbon Footprints
Three widgets to measure and help your ’sustainability bottom line’

Picture Credit: Gpigraph by Miss Rogue on flickr under Creative Commons Share Alike 2.0

5 thoughts on “GDP Growth Needs Replacing, But With What?”

  1. Hi Gavin — thanks very much for the question! GPI takes into account a whole variety of factors, such as biodiversity, overall health, household stability etc, basically the costs incurred by an economy.

    So while GDP measures the value of all goods and services produced, GPI then takes away the cost of crime, habitat loss, failing health etc to produce a NET figure.

    I’ve been meaning to blog on it — something for next week methinks. Once you understand it though, it makes the graph at the top of this blog rather scary.

    Best wishes — Chris.

  2. Hi Gavin — thanks very much for the question! GPI takes into account a whole variety of factors, such as biodiversity, overall health, household stability etc, basically the costs incurred by an economy.

    So while GDP measures the value of all goods and services produced, GPI then takes away the cost of crime, habitat loss, failing health etc to produce a NET figure.

    I’ve been meaning to blog on it — something for next week methinks. Once you understand it though, it makes the graph at the top of this blog rather scary.

    Best wishes — Chris.

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