The Genuine Progress Indicator:
Promoting a Sustainable and Equitable Maryland
By
Daphne Wysham, Institute for Policy Studies
May 22, 2014
What we will cover
1. A brief history of GDP
2. The basics of Maryland’s GPI – What is it
designed to measure? What are its components?
3. How the GPI can be used to inform policy
decisions and advance new economy initiatives
in MD and elsewhere
4. How can activists and community groups
support the GPI?
5. How can they be involved in the shift to measure
what matters?
A brief history of GDP
The economist who developed Gross Domestic Product
(or GDP), Simon Kuznets, warned that it shouldn't be
used as an instrument of social policy because it could
never adequately measure the things we value
“The welfare of a nation can scarcely
be inferred from a measurement of
national income.”
"Goals for more growth should be
more growth of what and for what.”
---Simon Kuznets
Robert F. Kennedy on GDP
“The [GDP] does not allow for
the health of our children, the
quality of their education, or the
joy of their play…it measures
everything, in short, except that
which makes life worthwhile. And
it tells us everything about
America except why we are proud
that we are Americans.”
--Senator Robert Kennedy, 1968
GDP: Striving for the wrong thing
“What we measure affects what
we do…If we have the wrong
metrics, we will strive for the
wrong things. In the quest to
increase GDP, we may end up
with a society in which most
citizens have become worse off.”
--Joseph Stiglitz et al. 2009
GDP: Counting quantity not quality
 The GDP is like a giant calorie
counter that tabulates how
many calories are in that plate
of french fries. It doesn’t tell us
if we're better or worse off as a
result of eating those greasy
fries or an apple instead.
 Do we really want “more XYZ” ?
Or do we want “better XYZ”? If
so, how do we get there?
Beyond GDP:
Motivations for a global movement
“Statistical indicators can
become the structural DNA
codes of nations. They reflect a
society’s values and goals and
become the key drivers of
economic and technological
choices.”
--Economist Hazel Henderson
1996
A global call to measure welfare,
not just output
“We are facing both an opportunity
and a duty to rethink what progress
really means and to build stronger
and more inclusive visions for the
future of our societies…We have to
move towards measuring welfare,
not just output. It will constitute a
major contribution to stability and
democracy”
--OECD Secretary-General Angel
Gurría, 2007.
Why GDP fails as a
measure of economic well-being
 GDP is a measure of economic activity, good, bad, and
neutral and not a measure of the well-being we receive
from consumption. We can be spending more for a lower
quality of life and yet GDP will increase.
 GDP gives no indication of sustainability. Consumption
financed by debt or depletion of human, social, built or
natural capital is assumed to be sustainable.
 All non-market aspects of the economy (unpaid labor) are
excluded.
 GDP says nothing about the distribution of wealth,
income, or opportunity in society.
GPI = System Change
“A system without feedback
eventually fails. And our country,
our states, our cities — they are
all systems. Life creates the
conditions that are conducive to
life. Period. Full stop. Perhaps,
there is no better description of
the intent of GPI. Its purpose is
to further the conditions that are
conducive to life.”
--MD Gov. Martin O’Malley
Maryland’s GPI
 Adopted by Governor
O’Malley in 2010.
 Used to provide a
more holistic measure
of sustainable
economic welfare than
Gross State Product.
 Based on 26 individual
indicators of
economic, social and
environmental wellbeing.
What is the GPI intended to measure?
The Genuine Progress Indicator =
A monetized indicator of sustainable economic well-being.
Attribute
Meaning
Limitations
Monetized
•
Benefits and costs that can
be expressed in monetary
terms
•
Benefits and costs that
cannot be expressed in
monetary terms
Indicator
•
An indication of how we’re
performing
•
Not a comprehensive
measure
Sustainable
•
Non-declining for
generations to come
•
But with a great degree of
uncertainty
Economic welfare
•
Limited to our
consumption of goods and
services
•
Not happiness or well
being in any other domain
Maryland GPI vs. GSP 1960 - 2010
Gross State
Product
GPI
GPI Policy Applications:
The “GPI note” for legislative analysis
Grassroots outreach in MD
 Priorities
 #1: Keep GPI in place--executive
 #2: Turn GPI from rearview mirror to a tool to help
inform future initiatives (GPI Note)--legislative
 #3: Get buy-in from business leaders (esp. sustainable
ones)
 #4: Contextualize the GPI in “new economy” frame
 #5: Outreach to faith communities, non-profits,
policy-makers on GPI Note possibilities
How can activists support the
GPI in their communities?
 In Maryland, write a note to the gubernatorial candidates




and express your support for seeing the GPI remain in
place.
Get cities, towns, counties to adopt the GPI as a metric.
Writer letters to the editor re: GPI, moving beyond GDP
Begin to create competition between counties or cities
around the highest GPI as an awareness raising tool.
Any time there is a critical land use plan or other important
policy in your community, request a GPI analysis of it.
GPI can play a role in a wide array of
public policy issues in Maryland
 Land use plans: By valuing natural capital and the costs of
sprawl, the GPI can help guide sustainable land use
choices.
 Economic development: The GPI can be the key indicator
of economic performance at the local level.
 Tax policy: The GPI can be used to help quantify the broad
social and economic implications of taxes and tax
incentives.
 Budgeting decisions: Helping set priorities for public
expenditures and investments.
 Infrastructure choices: The GPI can help quantify the many
benefits of green infrastructure.
How can people be involved in the
shift to measure what we treasure?
 Read our forthcoming report on the “GPI Note” and be
prepared to help us support it as a concept in the next
Maryland General Assembly.
Our team
 Daphne Wysham, Genuine Progress Project Director:
daphne@ips-dc.org
 John Talberth, President, Senior Economist, Cocreator of GPI, Center for Sustainable Economy:
jtalberth@sustainable-economy.org
 Heather Iliff, Vice president, Maryland Non-Profits,
heather@mdnonprofits.org
 David Hart, New Economy Maryland Field Director:
david@ips-dc.org
Learn more at our website
http://genuineprogress.net
Follow us on Facebook:
https://www.facebook.com/MovingBeyondGDP
Twitter:
@GPIndicator