Progress Indicators
A New Economy based on the principles of sustainable development will require new indicators of progress. We need to replace Gross Domestic Product and related macro economic indicators of overall economic activity with measures of how well we are meeting society’s needs for material goods and services, health, freedom, dignity, and knowledge. We also need to replace indicators used at the micro level of businesses, schools, and other institutions so that these institutions are not judged by how well they compete or extract profits but by how well they advance society’s well being. With its partner organizations, CSE develops and applies new indicators of progress that meet these objectives.
Some recent examples of our progress indicators work include:
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Beyond GDP: The Need for New Measures of Progress - Boston University Frederick S. Pardee Center for the Study of the Longer Range Future
The paper was co-authored by Robert Costanza, the Gordon and Lulie Gund Professor of Ecological Economics and Director of the Gund Institute for Ecological Economics at the University of Vermont; Maureen Hart, Acting Executive Director of the Community Indicators Consortium and president of the consulting firm Sustainable Measures; Stephen Posner, a graduate student and research assistant at the Gund Institute for Ecological Economics; and John Talberth, Senior Economist at the Center for Sustainable Economy. The paper reviews the history of how and why the gross domestic product (GDP), a measure of economic activity, has become a widely accepted standard for measuring a country's perceived overall progress in human development when that was never its intended purpose. The authors review other measurement methods that try to capture environmental and societal well-being in addition to economic growth and argue that a new indicator or set of indictors for measuring true human progress is urgently needed. Read:
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Closing the Inequality Divide - A GPI Analysis
In 2009, Maryland Governor Martin O'Malley adopted the Genuine Progress Indicator (GPI) as a new measure of economic well being in the state. CSE and Refining Progress pioneered the GPI's latest iteration, which Maryland now uses. Together with Institute for Policy Studies, CSE used Maryland's GPI to address the issue of inequality. In Maryland, as elsewhere, inequality of wealth, income, and opportunity has been steadily increasing for decades and thwarting genuine economic progress in many ways. Our analysis asked the question: "If Maryland returned to a level of income equity achieved in 1968 - its historical best - how would that affect the GPI?" Our analysis found that a return to a level of income equity achieved in the late 1960s would have the effect of doubling the average household income of the lowest quintile from $15,000 to nearly $30,000 and generating nearly $49 billion in economic benefits to the state each year in terms of increases in the value of personal consumption expenditures. We also found that additional spending by low and middle-income families could add another $10 billion. Finally, depending on how many household livelihoods improve, another $7 billion in benefits could be generated through lowered costs of crime, family changes, underemployment, and vehicle accidents and increased benefits from consumer durables and higher education. Read:
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International Program on Genuine Progress Accounts
At the recent Conference on Sustainable Development in Rio de Janeiro (Rio+20) member states of the United Nations System called for new indicators of progress to complement or replace GDP. This echoes over two decades of similar pleas from economists, development practitioners, and communities across the world who realize that basing economic policy on the growth of GDP is misplaced and leading to development decisions that undermine rather than foster a sustainable society. The Genuine Progress Indicator (GPI), which CSE help pioneer, is being increasingly adopted to meet this need. CSE is now working with the United Nations, individual countries, as well as state and local governments in the U.S. to begin economic performance monitoring, forecasting, and policy analysis using the GPI rather than GDP. Recently, the State of Maryland became the first U.S. State to formally adopt the GPI, Vermont followed suit, and Oregon is now exploring options. CSE will be working with the Institute for Policy Studies and other partners to help these and other U.S. states make the transition to the GPI and demonstrate its usefulness in guiding policy decisions. Read:
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A New Bottom Line for Progress
CSE President John Talberth prepared Chapter 2 in Worldwatch Institute's State of the World 2008. The Chapter, entitled "A New Bottom Line for Progress," calls for a new set of economic indicators that measure progress towards economic, environmental, and social sustainability and phasing out of the current set of indicators based on growth and globalization. A new set of indicators such as the Genuine Progress Indicator, indicators of eco-efficiency, and indicators of equity are needed to speed the transition towards a sustainable society based on renewable energy, diverse, local economies, protected natural capital, and growth in the quality of our lives not the amount of material goods and services we consume. Read:
