Macroeconomic Measurement: Environmental and Social Dimensions Chapter Six: Macroeconomic Measurement: Environmental and Social Dimensions

Why GDP is Not a Measure of Well-Being

Figure 6.1: Average Subjective Well-Being and GDP per Capita Sources: SWB from World Values Survey online data analysis, 2005–2008 survey wave; GDP from World Development Indicators online database

Alternative Approaches to Representing Well-Being

Value (billions of dollars) Table 6.1: Genuine Progress Indicator, United States, 2004 Component of GPI Value (billions of dollars) Personal consumption 7,589 Personal consumption after inequality adjustment 6,318 Value of household work and parenting + 2,542 Value of higher education + 828 Value of volunteer work + 131 Service value of consumer durables + 744 Service value of highways and streets + 112 Costs of crime 34 Loss of leisure time 402 Costs of underemployment 177 Cost of consumer durables 1,090 Costs of commuting and auto accidents 698 Costs of environmental defensive expenditures 21 Costs of pollution 178 Value of lost wetlands, farmland, and forests 368 Costs of nonrenewable energy depletion 1,761 Damages from carbon emissions and ozone depletion 1,662 Adjustment for capital investment and foreign borrowing + 135 Genuine Progress Indicator 4,419 Talberth et al., The Genuine Progress Indicator 2006: A Tool for Sustainable Development. Redefining Progress, 2007, pp. 1–2. http://rprogress.org.

Figure 6.2: Comparison of GDP and GPI per Capita, United States, 1970-2004 Gross Domestic Product GDP and GPI Per Capita (2000 US $) FIGURE 6.2 Genuine Progress Indicator Talberth et al., The Genuine Progress Indicator 2006: A Tool for Sustainable Development. Redefining Progress, 2007, pp. 1–2. http://rprogress.org.

Figure 6.3: New Zealand’s Auckland Regional GPI vs. DP, 1990-2006 Source: McDonald, et al., 2009

Figure 6.4: Components of the GPI for Maryland, 1960-2010 Source: http://www.green.maryland.gov/mdgpi/mdgpioverview.asp

Human Development Index (Scale: 1 - 100) Figure 6.5: Selected Countries as Ranked in the Human Development Index Human Development Index (Scale: 1 - 100)   95 - 100 — Australia, Norway, Ireland 90 - 94.9 Canada, Netherlands, Germany, Japan, Sweden, United States, Denmark, Switzerland, Spain, France, Belgium, Italy, Finland, Austria, Greece 85 - 89.9 United Kingdom, Poland, Singapore 80 - 84.9 Argentina, Portugal, Mexico 75 - 79.9 Russia, Colombia 70 - 74.9 Brazil, China, Philippines, Thailand, Turkey 65 - 69.9 Indonesia 60 - 64.9 South Africa 55 - 59.9 Kenya, India, Bangladesh 50 - 54.9 Pakistan 45 - 49.9 Nigeria FIGURE 6.5 Source: UNDP, Human Development Report, 2011 data

Accounting for the Environment

Figure 6.6 Indonesian GDP Adjusted for Resource Depreciation Source: Repetto, Robert, et al. (1989), Wasting Assets: Natural Resources in the National Income Accounts. Washington, D.C.: World Resources Institute.