The idea that gross domestic product growth is an unqualified good has come under fire.
In recent years the idea that gross domestic product (GDP) growth is an unqualified good has come under fire. A new study in Ecological Economics looks at whether its alternatives can drive real sustainability.
Initially used to measure the effectiveness of the US economy during World War II, the concept has quickly become a universal measure of economic health and progress. Although its relevance is widely disputed, no other concept has yet succeeded in overturning GDP as a dominant measure of progress.
In the new study the researchers sought to take a fresh look at how six different alternatives to GDP so as to find more sustainable societal trajectories. The indicators covered by their analysis included both already established measures such as the Human Development Index used by UN Development Programme and Social Progress Index, as well as more alternative measures like Sustainable Society and Happy Planet Index developed by think tanks.
Their analysis also included two measures mostly known in academic circles, Quality of Life Index and Global Well-Being Index, which place a larger emphasis on education, freedom, trust and social life. These societal goods look beyond the narrow confines of economic growth, competition and innovation.
Despite a number of previous studies emphasizing discrepancies when GDP was compared to other measures, such as China’s Genuine Progress Indicator at just around half of its GDP value, the present study concluded that most of the examined indicators featured low transformative potential and barely differed from GDP in terms of final scores.
Only the Sustainable Society Index and Social Progress Indicator have shown large enough divergence from GDP with the capacity to challenge the dominant economic narrative.
Part of the problem may be that many of the “alternative” indicators are initially based on GDP or to very similar to it, using other sub-measures as add-ons to GDP values, rather than independent and strong alternatives to the dominant narrative. In addition, not all examined indicators are necessarily the best alternatives to GDP.
Considering that economic indicators are a key decision support tool globally, it is clear we will need new indicators that can drive a massive shift towards more ecologically and socially viable economic and political models.