By Frances Moore Lappé
In this critical economic report, Frances Moore Lappé, Small Planet Institute cofounder and bestselling author of Diet for a Small Planet, details the shortcomings of using the GDP as a measurement of well-being and introduces a better option.
Over several decades, Costa Rica – with a per capita income just one quarter that of the United States – has made startling advances. Health care and education have expanded to make people’s lives longer and more fulfilling. In just one decade, the 1970s, the country slashed its infant death rate by more than two-thirds. By the 1980s, 60 percent of households benefited from quarterly health worker visits. By 2009, Costa Rica had risen to first place in the world on the Happy Planet Index, ranked by its citizens’ perceived well-being and the size of a country’s “ecological footprint.”
Such stories can spur us to get over the useless growth-versus-no-growth debate. But to truly succeed, we need better ways to measure what we value as Herman Daly pointed out two decades ago. And helping us do just that is a burgeoning international movement radically rethinking the gross domestic product (GDP) – that grossly misleading measure of a society’s well-being that is simply the sum of expenditures for goods, services, and exports minus imports.
To grasp the GDP’s shortcomings, in just one example, recall the earlier tale of indebted Indian farmers. Then consider that in 2010 India’s GDP got a boost when the State Bank of India provided to a businessman in Maharashtra – the state ranking highest in farmer suicides – credit to buy 150 Mercedes Benz. The GDP grows with one man’s frivolousness. But the suicides of Indian farmers, ruined by lack of fair credit and prices, occur in India every thirty minutes, on average. Yet the GDP subtracts nothing for their demise.
A very different measure, tracking well-being from a relational perspective, is the Genuine Progress indicator (GPI), brainchild of Ted Halstead, founder of Oakland-based Redefining Progress. The GPI looks at both how much money we spend and what we gain or lose with that spending.
The cost of crime-measured in money spent to replace damaged property or on medical and legal expenses – pushes up the GDP, but in the GPI this cost is deducted from the measure of national well-being. The GDP adds the value of natural resources we extract and sell, but the GPI looks at the true costs of that use – subtracting, for example, the $1.18 trillion cost of carbon emissions in just one year, as well as the destruction of forests and farmland.
So, while our GDP has grown steadily, our genuine progress – measured not only in financial wealth but also in the positive value of leisure time and fair income distribution and the cost of environmental damage, to name a few aspects – is hardly better than it was in the mid-1970s.
The GPI encourages us to drop the narrow “more-or-less” lens and to ask:
Are our societies flourishing, and how do we know?
What does any quantitative measure tell us about the qualities of the society we want to grow?
Using a GPI, it’s likely we’d make different choices. Here’s a glimpse of what that might look like: For three years, citizen protests against building a third runway at London’s Heathrow Airport were stymied. But in 2010 the protestors prevailed after an independent study took a wider view. It considered costs of additional carbon, congestion, and pollution, for example, and the project’s touted economic gain turned into a cost to the UK “upward of ₤5 billion.”
Polls show that majorities in many countries favor more accurate measures of well-being, like the GPI. The “good news,” says Italy’s chief of national statistics, Enrico Giovannini, is that in half a dozen countries, including Germany, the United Kingdom, and France, top officials are expanding their focus beyond mere quantitative economic growth to “well-being.” Even China has embraced fifty-five green indicators.
Seem unlikely to find favor here?
I would have thought so, but in early 2010, Maryland became the first US state to develop and adopt the GPI to measure its progress, using twenty-six indicators of economic, social, and environmental well-being.
The state intends to use a lens that captures well-being to plan for the future, so it turned to the University of Maryland’s Center for Integrative Environmental Research to develop a modeling tool to forecast how investments today would affect prosperity fifty years from now – measured by the GPI. It projects that going all out for green jobs, clean-energy savings, or what the center’s director, Matthias Ruth, calls “smart growth,” would each double the state’s GPI.
Certainly, many people hearing about the breakthroughs in this chapter would perceive them as examples of growth, really positive growth. Maryland splashes these words across its website promoting its new measure of progress: “Smart, Green and Growing.” Surely, “growth” is a word I personally don’t want to give up. I want my tomatoes to grow, and my friendships.
But the word, applied to societies and economies, has for so long meant only a quantitative measure of expansion that it’s probably time to give it a rest. To communicate the enhancement of qualities we want, rather than the expansion of quantities we probably don’t, we might be a lot more effective using other phrases and terms: progress toward well-being, for example, as in the Genuine Progress Indicator. Or we might choose, as I have here, to speak of “flourishing,” “thriving,” “life-enhancing” economies and communities.
And why, you might wonder, not simply stick with the much more common term “sustainable”? It’s all right. But “to sustain” suggests “bearing up” or “keeping on,” and I want more. And I think most of us do too.
— Frances Moore Lappé is a cofounder of the Small Planet Institute and bestselling author of Diet for a Small Planet. This article is based on a section from her most recent book, Eco-Mind: Changing the Way We Think, to Create the World We Want.
Excerpted with permission from EcoMind: Changing the Way We Think to Create the World We Want by Frances Moore Lappe. Available from Nation Books, a member of The Perseus Books Group. Copyright © 2011.