Gross Domestic Product (Part 3)

© 2011 Pearson Education, Inc. Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI). Gross Domestic Product (GDP) = total monetary value of goods and services a nation produces. -Sums all economic activity… whether good or bad. -Does not account for benefits such as volunteerism -Does not account for external costs such as environmental degradation and social upheaval. (i.e., pollution increases GDP). Genuine Progress Indicator (GPI) = An economic indicator introduced in 1995 that attempts to differentiate between desirable and undesirable economic activity. -Positive contributions (i.e. volunteer work) not paid for with money are added to economic activity -Negative impacts (crime, pollution) are subtracted

© 2011 Pearson Education, Inc. Define the terms Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI).

© 2011 Pearson Education, Inc. We can measure progress with full cost accounting Gross Domestic Product (GDP) = the total monetary value of goods and services a nation produces Pollution, oil spills, disasters, etc. increase GDP Does not account for nonmarket values Does not express only desirable economic activity

© 2011 Pearson Education, Inc. We can measure progress with full cost accounting In the United States, GDP has risen greatly, but GPI only slightly Genuine Progress Indicator (GPI) = GDP alternative that differentiates between desirable and undesirable economic activity Positive contributions (e.g., volunteer work) not paid for with money are added to economic activity Negative impacts (crime, pollution) are subtracted

© 2011 Pearson Education, Inc. GDP vs GPI…

© 2011 Pearson Education, Inc. The Social Progress Index measures the extent to which countries provide for the social and environmental needs of their citizens. Fifty-two indicators in the areas of basic human needs, foundations of wellbeing, and opportunity to progress show the relative performance of nations. The SPI measures the well-being of a society by observing social and environmental outcomes directly rather than the economic factors. The social and environmental factors include personal safety, ecosystem sustainability, health and wellness, shelter, sanitation, equity and inclusion and personal freedom and choice. Social Progress Index

© 2011 Pearson Education, Inc. Social Progress Index: 2014

Copyright © 2008 Pearson Education, Inc., publishing as Benjamin Cummings TED Video Michael Green - What the Social Progress Index can reveal about your country (14:56) Michael Green has created the Social Progress Index, a standard to rank societies based on how they meet the needs of citizens. “The term Gross Domestic Product is often talked about as if it were “handed down from god on tablets of stone.” But this concept was invented by an economist in the 1930s. We need a more effective measurement tool to match 21st century needs, says Michael Green: the Social Progress Index. With charm and wit, he shows how this tool measures societies across the three dimensions that actually matter. And reveals the dramatic reordering of nations that occurs when you use it. ”