Evolving Money/Alternatives to GDP

Here is a list of macroeconomic policy alternatives to Gross Domestic Product (GDP) as primary measures of national progress, each with a brief description.^[1] These alternatives seek to capture well-being, sustainability, equity, and non-market contributions that GDP ignores:

1. Human Development Index (HDI)

• What it measures: Combines life expectancy, education level (mean and expected years of schooling), and per capita income.
• Purpose: Emphasizes people’s capabilities and overall development, not just economic output.

2. Gross National Happiness (GNH)

• What it measures: A multidimensional index from Bhutan that includes psychological well-being, health, education, time use, cultural diversity, good governance, ecological diversity, and living standards.
• Purpose: Reflects holistic well-being and societal progress beyond material wealth.

3. Genuine Progress Indicator (GPI)

• What it measures: Adjusts GDP by adding positive contributions (e.g., household labor, volunteer work) and subtracting negatives (e.g., pollution, crime, inequality, resource depletion).
• Purpose: Captures the net impact of economic activity on well-being and sustainability.

4. Index of Sustainable Economic Welfare (ISEW)

• What it measures: Similar to GPI, includes personal consumption, income distribution, and deducts environmental costs and resource depletion.
• Purpose: Aims to show whether current economic activity is sustainable and beneficial in the long term.

5. Ecological Footprint

• What it measures: The amount of biologically productive land and water required to produce what a population consumes and absorb its waste.
• Purpose: Assesses environmental sustainability by comparing human demand with Earth’s capacity.

6. OECD Better Life Index

• What it measures: Includes 11 dimensions such as housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety, and work-life balance.
• Purpose: Allows countries to compare well-being in areas people care about most.

7. Social Progress Index (SPI)

• What it measures: Focuses on social and environmental outcomes—basic human needs, foundations of well-being, and opportunity—independent of GDP.
• Purpose: Measures a society’s capacity to meet its citizens’ needs and improve quality of life.

8. Wealth Accounting and Valuation of Ecosystem Services (WAVES)^[2]

• What it measures: Accounts for natural capital (e.g., forests, water, minerals) and ecosystem services alongside produced and human capital.
• Purpose: Ensures that natural resource depletion and environmental degradation are factored into national accounts.

9. Happy Planet Index (HPI)

• What it measures: Life expectancy × well-being ÷ ecological footprint.
• Purpose: Measures how efficiently countries convert natural resources into long and happy lives for their citizens.

10. Inclusive Wealth Index (IWI)

• What it measures: The sum of a country’s natural, human, and produced capital.
• Purpose: Focuses on long-term sustainability and intergenerational equity by assessing wealth, not just income or output.

1. ↑ ChatGPT generated this text responding to the prompt: “Provide a list of macroeconomic policy alternatives to Gross Domestic Product and include a brief description of each”.
2. ↑ "Home page | Wealth Accounting and the Valuation of Ecosystem Services". www.wavespartnership.org. Retrieved 2025-05-03.