In the first decade of this century, the poverty rate rose, and no net jobs were created—yet America’s GDP grew by nearly two percent. So why do we rely on GDP more than any other data point to gauge society’s progress? Vermont thinks it’s found an alternative. In a few weeks, a team of University of Vermont researchers will unveil a "Genuine Progress Indicator" to supplement more traditional economic metrics as a tool to help shape public policy.
Vermont isn’t the first place to try out the concept, but they are taking it a step further than any other state by tying GPI to actual government policies.
While GDP is a brute-force calculation of economic activity, Vermont’s GPI will incorporate environmental and social statistics to produce a more holistic measure for residents' quality of life. For example, while the Green Mountain state’s GDP grew 3.65 percent from 2000 to 2010, its child poverty and infant mortality rates rose and it’s rate of volunteerism fell slightly. A state GPI score might try to incorporate all four data points, along with things like divorce rates, average hours spent in traffic, and air quality data.
Academics have been discussing the concept of GPI for some time. One newly released study from Australian National University calculated a GPI for the 17 most populous nations in the world using similar metrics, finding that GPI leveled off around 1978, even as GDP continued to grow. Two Nobel Prize-winning economists, Amartya Sen and Joseph Stiglitz, jump-started interest in GDP alternatives stateside.
Vermont isn’t the first place to try out the concept, but they are taking it a step further than any other state by tying GPI to actual government policies. Maryland’s Governor started posting the state’s GPI on the state website in 2010, and now groups in states like Utah, Oregon, and Minnesota are arguing for similar measures.
Critics point out the slipperiness of the concept, as the Burlington Free-Press summarizes nicely here: Who can really determine the value of abstractions like a good education and clean air? It will be interesting to see if even a pie-in-the-sky body politic like Vermont’s will be able to use such a highly subjective composite of social statistics to budge decision-makers from their single-minded focus on dollars and cents accounting for societal health.