What's wrong with using the GDP?

1. What’s wrong with
GDP?
Mireille Khouri - Marie Mège - Brannon Naito - Lu Sun

2. What is GDP?
• Gross Domestic Product is the market value of all
officially recognized final goods and services produced
within a country (usually calculated on an annual basis)
• The basic formula for calculating the GDP is:
GDP = C + I + E + G
Consumer
spending
Investment
made by
industry
Excess of
export
over
Import
Governmen
t spending

3. What does it NOT
measure?
• 1. Health
• 2. Infant mortality
• 3. Morbidity
• 4. Suicide rates
• 5. Crime
• 6. Poverty
• 7. Environmental
health/decay and
destruction of the
natural environment
• 8. Infrastructure such
as highways and
bridges
• 9. Family breakdown
• 10. Loss of leisure
time
• 11. Cost of
commuting to work
• 12. Lack of civility in
communities
• 13. Lack of concern
for future generations
• 14. Income gap
(women/men;
poor/wealthy)

5. Alternatives to the GDP?
GPI (Genuine Progress Indicator)
Efforts to Capture the Environmental Sustainability
Aspects
GSDP (Gross Sustainable Development Product)
• Measures the cost of growth and development
GESDI (Gross Environmental Sustainable Development Index)
• Measure the quality of growth and develoment

6. The GSDP Measures:
• Economic impacts of environmental and health degradation or
improvement
• Resource depletion, depreciation or appreciation or finding new
resources (stocks)
• Impact of people activity on environment
• Impact of people activity on availability of resources
• Impact of people activity on economic development
• The quality of environment, people, resources and development and
impact of changes in these on the national income and wealth
• Impact of global concerns on the economy
• Welfare, quality of life and economic development of future
generations
• Expenditures on pollution, health, flood, car accidents
• The resource stocks and productive capabilities of exploited people
and ecosystems
• The impact of economic growth on biological diversity
• Impacts of social costs, health costs, on future generations and the
nation’s income

7. The GESDI Measures (200 indicators):
• People (111 indicators) – includes dimensions of social, economic,
psychological, physical and spiritual indicators as well as literacy,
rights, justice, diversity, community, peace and conflict, legal and
political, etc)
• Available resources (11 indicators)
• Environment (41 indicators)
• Economic Development (70 indicators)

8. What does GPI measure?
• 1. Unpaid work
(housework, parenting
and care giving)
• 2. Crime
• 3. Family breakdown
• 4. Household work
• 5. Volunteer work
• 6. Income distribution
• 7. Resource depletion
• 8. Pollution
• 9. Defense expenditures
• 10. Long term
environmental damage
(wetlands, ozone,
farmland,
• 11. Changes in leisure
time
• 12. Life span of
consumer durables and
public infrastructure
• 13. Dependence on
foreign assets
• 14. Services (highways,
streets)
• 15. Loss of leisure
time (to devote to
community, self, hobbies,
relaxation, spend with
family)
• 16. Cost of auto
accidents
• 17. Cost of under-
employment
• 18. Cost of noise
pollution and household
pollution (sick house
syndrome)

10. List of countries by GDP:

11. What’s wrong with the GDP?
GDP only measures the gross, overlooking the net.
Social factors are not reflected in the calculation of GDP.
GDP encourages a single bottom line mentality for businesses.

12. GDP measures income, but not
equality, it measures growth by not
destruction, and it ignores values like
social cohesion and the environment.
• The world must adopt and standardize a different
indicator to enable evaluations of a country’s social
factors.
• Changing the focus on the country level will contribute
to a socially positive trickle-down effect.

13. Questions?