Genuine Progress Indicator
Also called: GPI · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Beyond NCERT
Meaning
The Genuine Progress Indicator (GPI) is an alternative to GDP for measuring welfare. It starts from consumption. It adds useful things GDP leaves out, such as household work and volunteering. It subtracts costs that GDP ignores or even counts as gains, such as crime, pollution and the using-up of natural resources. It tries to show whether people are actually better off.
Example
A city spends more on cleaning up a polluted river and on dealing with crime. GDP rises because this spending counts as output. GPI subtracts the pollution and crime, so it may stay the same or fall.
Don't confuse with
- Green GDP: this subtracts only the loss of natural resources and environmental damage. GPI also adjusts for social factors such as crime, household work and volunteering.
Related concepts
- GDP and welfare
- Non-monetary exchanges
- Green GDP
- System of Environmental-Economic Accounting
- Natural capital accounting
- Inclusive wealth
- Beyond GDP