Genuine Progress Index for Atlantic Canada Indice de progrès véritable - Atlantique GDP & GPI Accounting: What is the difference? What is the relationship? Genuine Progress Institute Halifax, NS. 6 July, 2011

What kind of Nova Scotia are we leaving our children...? Can GDP answer that question? Can we really explain GDP accounting flaws?

... In experience and language of ordinary Nova Scotians Nova Scotia’s unique qualities – natural beauty, strong communities, rural-urban balance, values More possessions, longer lives But, defining wellbeing more broadly: Some disturbing signs

Warning Signals: Determinants of Wellbeing Chronic diseases (e.g. asthma, diabetes) Crime Greater inequality, economic insecurity, debt (e.g. student debt) Global warming, resource depletion (fish, forests), pollution

“The more the economy grows, the better off we are” - Sending the wrong message?

More equals better? = the language of health We currently measure how well off we are as a society by how fast the economy is growing. The language of health: A growing economy is “robust” “healthy” “dynamic.” If people spend less money, consumer confidence is “weak.” “Shopping is patriotic.” If economy shrinks, we have a “depression”

The Big Myth: ‘Healthy’ Economy = Healthy Society  Resource depletion as economic gain: The more trees we cut down, the more the economy grows  More consumption, energy use, greenhouse gas emissions, make economy grow, but are we better off?

Current measures of progress send the wrong messages  Crime, sickness, pollution, war, cigarette sales, junk food, natural disasters make economy grow —just because money is being spent.  GDP can grow even as poverty and inequality increase.

Counting costs as costs, not gains to the economy. Eg: The less people trust the water coming from their taps and the more they buy bottled water, the more the economy will grow Free, clean tap water has no value in our conventional measures of progress based on GDP and related economic growth statistics GPI: $33 million spent by households on filters, bottled water = cost (“defensive expenditure”), while wetlands, rivers, lakes valued

GDP only counts paid work  E.g. We count lawyers, advertising executives, brokers, but ignore unpaid work that contributes directly to community health (volunteers, work in home)

How GDP measures time  More work hours make economy grow (-> stress; Prozac) [cf total hours: ]  GDP ignores work that contributes directly to community health (volunteers, work in home)  Free time has no value – affects health; needed for recreation, family, friends, reflection, reading

In sum: GDP….. Makes no distinction between economic activities that create benefit and those that cause harm Assigns no value to health, security, wisdom, environmental quality, culture, ethics, or strong communities. RFK (1968): GDP “measures everything except that which makes life worthwhile.”

Why We Need New Indicators - Policy Reasons:  Economic growth = ‘better off’ sends misleading signals to policy-makers and local communities  Vital social, environmental assets ignored  Preventive initiatives to conserve and use resources sustainably, to reduce poverty, sickness and greenhouse gas emissions, are blunted and inadequately funded

Impacts on health & wellbeing Materialism, excess vs balance, prevention Inequity invisible, yet key determinant of health (BMJ) Long hours and health (StatCan study), women’s double burden of paid + unpaid work Stress, loss of free time,, physical inactivity, obesity (StatCan), decline in voluntary activity

Indicators are Powerful What we measure:  reflects what we value as a society;  determines what makes it onto the policy agenda;  influences behaviour (eg students)

There is a better way…. Four hundred leading economists, including Nobel Laureates, said: “Since the GDP measures only the quantity of market activity without accounting for the social and ecological costs involved, it is both inadequate and misleading as a measure of true prosperity....New indicators of progress are urgently needed to guide our society....The GPI is an important step in this direction.”

Better measures can help Nova Scotia:  foster common vision and purpose;  identify strengths and weaknesses;  change public behaviour;  hold leaders accountable at election time  initiate actions to promote wellbeing

Three steps are needed: New measures can no longer just be “add-ons” or satellites, but must challenge and critique the still dominant GDP-based measures of progress One coherent, integrated framework to become new core measure of progress Beyond indicators to a new set of national accounts – full national wealth

Caveat: New GPI accounts do not seek to replace GDP … But replace the misuse of GDP as a measure of progress, wellbeing, and prosperity: Cite Kuznets warnings on proper use of GDP – what is growing Anything can make economic grow, incl. depletion of natural wealth + activities that signify decline in wellbeing, prosperity (e.g. crime, crashes, pollution) Quantitative measure of size cannot assess quality of life, though GDP will always have role in assessing size of market economy – less important

Purpose in relation to GDP Replace misuse of GDP as measure of progress and wellbeing (not abolish GDP!) To relegate GDP to function for which it was originally designed and intended – as measure of size of economy (Kuznets) To redefine ‘healthy economy’ in terms of true wealth instead of growth, so that misleading signals will no longer blunt initiatives to reduce GHGs, poverty, inequity; conserve resources; prevent illness, etc.

In the GPI Accounts…:  Natural resources are seen as capital assets subject to depreciation and requiring re- investment.  Crime, sickness, disasters and pollution clean up are counted as costs rather than contributions to well-being.  Voluntary work, unpaid household work, free time, health, educational attainment are valued.

In the GPI Accounts….: Reductions in greenhouse gas emissions, pollution, crime, poverty, ecological footprint are signs of genuine progress that make the index rise. Unlike measures based on GDP, "less" is sometimes "better" in GPI accounting Growing equity is sign of progress Economic valuations are key strategy

The Genuine Progress Index – 100+ detailed reports to date: Time Use Economic Value of Unpaid Childcare and Housework √ Economic Value of Civic and Voluntary Work √ Value of Leisure Time √ Working Time and Employment √

Human Impact on the Environment Greenhouse Gas Emissions √ Sustainable Transportation √ Ecological Footprint Analysis √ Solid Waste √ Natural Capital Soils and Agriculture (5) √ Forests √ Marine Environment/Fisheries √ Water Resources / Water Quality √ Energy √ Air Quality √ Nova Scotia Genuine Progress Index: Components

Social and Human Capital Population Health (many) √ Educational Attainment √ Costs of Crime √ Living Standards Income Distribution √ Debt and Assets √ Economic Security √ Nova Scotia Genuine Progress Index: Components

Genuine Progress Index for Atlantic Canada Indice de progrès véritable - Atlantique