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Other States Joining Vermont To Develop Genuine Progress Indicator

An advisory group is poised to make recommendations to the Shumlin administration on implementing a new measure of economic well-being. Last year the legislature gave a green light to the establishment of a Genuine Progress Indicator.

Vermont's adoption of GPI reflects an increasing interest among states to incorporate  the indicator in policy decisions.

Gross Domestic Product, or GDP, has long been the standard measure of economic activity, but as far back as 40 years ago, economists were thinking about developing broader measures.

In a famous 1968 speech, presidential candidate Robert Kennedy pointed out that the GDP takes into account all economic activity, even when it’s potentially harmful to our well-being.

“Gross National Product counts air pollution, and cigarette advertising; ambulances to clear our highways.  It counts special locks for our doors and jails for the people who break them,” Kennedy said.

Middlebury College professor of economics Peter Matthews calls the speech an “absolutely wonderful piece of economic poetry.”

Matthews says the discussion about how to devise a more comprehensive measure of economic well-being has turned a corner in the past decade.

“There has been a kind of ‘happiness revolution’ in economics,” he says. “For a long time economists weren’t terribly interested in things like self-reported measures of well-being, or happiness or attempts to measure the extent to which people realize potentials or capabilities.”

The challenge, says Matthews, has been to give numerical values to sometimes subjective and qualitative ideas.

“What some of the economics profession as a whole is wrestling with is this idea potentially of quantitating differences in well-being or happiness or welfare; and for some economists that’s the cutting edge of the frontier at this point,” Matthews explains.

The GPI Gross Progress Indicator that the state is using looks at 25 indicators, weighing economic benefits alongside environmental and social impacts. In July state officials got their first detailed look at how Vermont GPI would function in a summary of the work to date by the Gund Institute at the University of Vermont.

UVM professor of ecological economics Jon Erickson was a co-author of the report.  He says Vermont is working with 18 other states to standardize the Genuine Progress Indicator.

“We’re trying to move to what you might call a GPI 2.0 but all together.  We’re not each going off and measuring things differently and picking and choosing different indicators” Erickson says.

Vermont is the only state so far to legislate the creation of a state GPI.  Maryland developed a GPI in 2009 at the urging of Governor Martin O’Malley.  Marylland’s GPI Website includes charts and interactive calculators.

Sean McGuire served as Director of Sustainability Policy for Maryland. McGuire says the GPI is not intended as a litmus test to apply to policy decisions.  It’s more like a snapshot that can show trends.  He compares it to the monthly unemployment number.

“That’s not a tool, it’s a number,” says McGuire.  “It’s telling you have many people who are looking for jobs and can’t get one, which is very important.  We use that to say, ‘ok, how do we get that number lower'.  The GPI is very similar to that.  It’s a gauge.”

McGuire says interest from states in tracking GPI is growing.  In June representatives from governments and academic institutions in 20 states attended a GPI summit in Maryland.

The GPI is just one economic yardstick that’s been developed in recent years.  There are many others, including the Happy Planet Index, the Gross National Happiness measure, and the Human Development Index.  McGuire says developing metrics that go beyond the Gross Domestic Product is still an emerging science.

“It is somewhat emerging, but it’s getting to the fundamental question of what do we want in our communities?  Is it well-being?  Is it economic pursuit?   What is it that we’re looking for in the policies that we create,” he says.

Vermont’s Genuine Progress Indicator for 2012 will be completed soon and released by year’s end.