Alternative Measures of Economic Growth and Progress
WRITTEN ASSIGNMENT DUE WEEK 5
ALTERNATIVE MEASURES OF ECONOMIC GROWTH AND PROGRESS
Explore the following links to address the assignment below.
"Measures of Well-Being: There is more to it than GDP," a publication from the research arm of Deutsche Bank, gives an excellent overview of critiques of GDP as a measure of well-being and some basic information about several alternative measures such as the Weighted Index of Social Progress, the Index of Economic Well-being (from Canada), the Human Development Index, and the Genuine Progress Indicator.
For a more detailed look at the Genuine Progress Indicator, which puts considerable weight on the costs of environmental degradation, see Redefining Progress's web site. Also visit the European Environmental Bureau website at www(dot)eeb(dot)org. Search for "GDP limitations." Once there, click the link, "EEB Briefing Document: Ideas for Overcoming the Limitations of GDP as a Progress Indicator (December 2007)." What are some limitations of the Gross Domestic Product measure and some ideas for improving it?
Your Assignment: Choose one or two of the alternative measures of output or well-being noted. If our standard measurement of economic progress that measure, instead of Gross Domestic Product (GDP), how would our behavior change? “Behavior” refers to individual, business and government (state, local, national). Remember, environmental issues are not the only ones counted differently by the GPI than by GDP; work done at home, leisure time, crime, and other quality of life issues are also a part of the GPI measurement.
Your essay explaining the issues requested of 2-3 pages should be typed, showing proper grammar, punctuation, spelling, and sentence structure, with citations prepared in APA style.
Submit it through the assignment drop box on the course site by Sunday of Week 5
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The GDP that is the Gross Domestic Product is a measure of economic growth that is used globally. GDP measures an economy's growth by summing up the value of all goods and services produced in an economy in monetary terms CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009). Overall GDP is, therefore, the summation of consumption and government expenditures, net exports, and net capital formation of a country CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
The Deutsche Bank, for example, criticizes the GDP approach as measuring components of the economy that do not promote the people's well-being CITATION Ber06 \l 1033 (Bergheim, 2006). It, therefore, proposes approaches that include non-economic domains and a broad measure that reflects the highest form of happiness for its citizens CITATION Ber06 \l 1033 (Bergheim, 2006).
GDP does not differentiate economic transactions that promote or reduce people's well being or the sustainable and unsustainable transactions in the economy. Therefore, it tallies even the non-required expenditures attributed to aspects such as; crime, environmental degradation, and natural disasters CITATION Tal07 \l 1033 (Talberth, Cobb, & Slattery, 2007). Several approaches have been proposed to replace GDP such as; Measures of Economic Welfare (MEW), the Weighted Index of Social Progress (WISP), and the Human Development Index (HDI) including the Genuine Progress Indicator (GPI) CITATION Ber06 \l 1033 (Bergheim, 2006). However, this paper will focus on the GPI and its impact on economic behavior.
Genuine Progress Indicator
The Genuine progress Indicator (GPI) initially revised from the Sustainable Economic Welfare Index (ISEW) is a guide to welfare promotion economists proposed by Daly and Cobb in 1989 CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009). It takes into account current environmental aspects and use of natural resources and ecosystems in the long term sustainably CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
The GPI, therefore, addresses a broad spectrum of economic activity and welfare and these affect individual businesses and government. GPI covers broad economic areas that lead to certain “behavior†changes. These areas are related to, for example, the environment, crime, leisure time, work done at home, underemployment, accidents, and other life issues CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
Cost of Crime
The cost of crime especially in this modern society is very high and may be direct (involving property loss or medical expenses) or indirect (psychological trauma or lost opportunities due to fear) CITATION Tal07 \l 1033 (Talberth, Cobb, & Slattery, 2007). Crime costs also include the expenditure on defensive items such as purchasing security devices and services. These costs are ...