- Summary
- Policy Implications
- What is the GPI?
- Value of GPI
- Summary of Income Distribution Effect by County
Summary of Results
The Bay Area's Genuine Progress Indicator (GPI) was $16,974 per capita in 2000, $7,500 greater than the national GPI average. Marin County had the highest GPI in the Bay Area, while Alameda had the lowest. On average in the Bay Area, traditional economic income figures overestimated economic well-being by $14,000 per person. Much of this discrepancy is due to over $100 billion in defensive expenditures, natural capital depletion costs, inequitable distribution of wealth, and social breakdown counted as positive or not at all in the traditional economic growth indicators, i.e. Gross Domestic Product, its regional corollary Gross Regional Product (GRP), and per capita income. Over all, GPI comes in about 45% below total expenditures (GRP) for the region.
Housework, volunteer work, and capital investments and services contributed $63 billion dollars to the Bay Area. This amount is added to GPI, in contrast with the accounting techniques used to calculate the Bay Area's Gross Regional Product, which does not include these positive additions. Costs associated with environmental degradation, economic inequities, and defensive expenditures, however, resulted in a $104 billion deduction from the Bay Area's GPI. Environmental costs in the Bay Area amounted to $31.1 billion, topped by the use of non-renewable natural resources. Costs from commuting and job-housing imbalance hit $15 billion and underemployment took $4.4 billion from the region's total GPI.
Policy Implications
The GPI provides economic policy makers with an alternative measurement as they evaluate the region's economic progress. Do citizens care more about sheer volume of market transactions or the quality and distribution of economic production? If it is the latter, local, county, state, and national government bodies need to collect and report more meaningful information than the current standard economic growth indicators provide. An indicator like the GPI can lead to better decisions based on the real state of the economy in the Bay Area. GPI provides a first step toward this end.
On the ground in the Bay Area, the findings suggest that improvements in the Bay Area's economy, corresponding to an increase in GPI could come from policies that result in jobs that match residents' needs near where they live (resulting in reduced commute times), policies that decrease use of non-renewable resources (especially oil), and policies that provide education and training for employment in information and service industries that pay livable and equitable wages.
GPI is not an anti-growth measure of the economy, it is a composite indicator of numerous factors related to the collective well-being of the regions economy. It is not a perfect measure and like GDP it requires some value judgments, but it does provide a compelling counter point to accounting procedures that, in effect, value all economic activity as desirable.
What is the GPI?
The Genuine Progress Indicator (GPI) measures economic well-being and was developed to address some of the major short-comings of Gross Domestic Product (GDP) and its regional corollary, Gross Regional Product (GRP). GDP is a measure of the volume of formal economic activity and receives much attention from policy makers. By counting all economic activity as positive GDP overlooks some significant economic contributions and costs. GPI, by contrast, classifies expenditures of time and money as positive or negative in order to estimate economic well-being. GPI adds the value of benefits such as housework and volunteer work. GPI makes deductions for such things as declining environmental quality, income inequity, and social breakdown. This is in contrast to the GDP, which counts any and all economic activity as positive. By necessity, value judgments are made to arrive at positive or negative economic valuations; economists continue to debate their appropriateness. GPI attempts to make the most reasonable and accurate estimates, with the acknowledgement that there is still room for progress.
The Value of GPI
Some may argue that a measure of economic progress must be scientific and value free. Attempts to measure how the economy actually affects people involve too many assumptions, too many value judgments regarding what to include and how, curmudgeons might argue. GDP, however, is not value free. To leave social and environmental costs and contributions to the economy out does not avoid value judgments. On the contrary, it makes the obvious value judgment that such things as the destruction of farmland and natural resources, underemployment, longer-commute times, and the loss of free time, count for nothing in assessing how the economy is fairing. GDP does put a value on such factors -zero.
Not to be deterred by the seemingly unachievable value free hurdle, Redefining Progress has developed estimates for the kind of factors that the economic authorities might have difficulty stomaching. The result is an economic indicator that gets much closer to the economy that people experience. The Genuine Progress Indicator includes more than twenty aspects of our economic lives. GPI begins with the same personal consumption data that GDP is based on, expect the data is adjusted in a number of ways. Adjustments are made for some factors (income distribution), additions are made for things like volunteer and housework, and deductions are made for crime, degradation and destruction of natural resources, and other factors. All this results in a substantively different picture than the GDP would suggest.
Summary of Income Distribution Effect
by County (More County Report Analysis)
| Per Capita Income (Consumption) | Income Distribution Index |
Adjusted Income (Used in GPI) |
|
|---|---|---|---|
| Alameda | $17,796 |
1.1895 |
$14,960 |
| Contra Costa | $22,961 |
1.2120 |
$18,943 |
| Marin | $33,722 |
1.3793 |
$24,447 |
| Napa | $19,796 |
1.1729 |
$16,877 |
| San Francisco | $25,917 |
1.3495 |
$19,204 |
| San Mateo | $27,034 |
1.2766 |
$21,174 |
| Santa Clara | $24,596 |
1.2409 |
$19,820 |
| Solano | $16,298 |
0.9355 |
$17,420 |
| Sonoma | $19,293 |
1.0912 |
$17,679 |
| Bay Area Average | $23,046 |
1.2053 |
$19,120 |
