Is there an alternative to GDP?

We have seen the calls for an alternative measure of economic activity to GDP. From triple bottom line accounting to a happiness index, there have been alternatives such as the Genuine Progress Indicator GPI, United National Human Development Index UNHDI and Gross Sustainable Development Product Index GSPI promoted.

The GDP does not account for the impact of negative economical damages such as air pollution and destruction of nature by economic growth. There are significant portions of economic activity that are not captured because they are unpaid, and at the other end of the scale there is paid economic activity  which is captured by the GDP measure, but doesn’t actually contribute much to the well being and economic advancement of the country. We have heard stories from the Great Depression of men being paid to dig holes, and then other men being paid to fill them in. It’s economic activity for sure. It kept people busy at a time when there were no jobs. But did it contribute to the economic advancement of the country? Hardly. There is a well-known paradox that natural disasters look like they are good for the economy, because despite the destruction, they will be followed by an increase in spending. The fact that it is spent on repairing damaged houses and roads does not register.

One of the activities which goes into measuring GDP is putting out orange road cones, and then picking them up again. As we must surely be approaching peak road cone displacement, perhaps we are getting closer to deleting such activities from the measure of economic well being. And having a 30 minute safety induction in order to undertake a 30 second lightbulb change is another of those activities which contributes to a GDP which looks good in International comparisons, but does little as a real measure of positive economic advancement. That’s an incentive to look a little harder for a more meaningful alternative measure.