Umwelt und Nachhaltige Entwicklung

3.1 The deficiencies of GDP related measures

Clemens BachmannThomas Haid

Siegfried Lindner

The GDP

The GDP is the amount of all goods and services produced in one period, usually one year, in a particular geographic area, usually a country.

There are three ways to calculate:

• the expenditure

• the production side

• the income side.

All three methods should give the same result.

The components

GDP (Y) =C+I+G+NX• C (consumption)

• I (investment)

• G (government spending)

• NX (net exports)

 

From GDP to Personnel disposable income

X-ZGDP

Depreciation 

G 

NDP Indirect Taxes 

Personnel Income

 

I 

National Income

Personnel disposable

incomeC

The circular flow concerning GDP

• monetary unit spend = monetary unit received by someone

• households are the proprietor of all factors of production, such as labor, capital, land and owner of businesses

GDP and National Welfare

GDP ≠ Nationale Welfare

GDP is not a measure of economic well-being.

• achievements that increase well being are not counted because they are no market activities.

• unpaid work, such as voluntary activities

• work in the private sphere

• domestic work

Potential and limits of GDP

• high and rising level of inequality

• depreciation of capital goods

• depletion of natural resources

• degradation of the environment

Other indicators besides GDP

• Genuine Progress Indicator

• Happy Planet Index

• Human Development Index (HDI)

• Extended Economic Indicators

• Environmental Performance Index

• Genuine Savings

• Ecological Footprint

Genuine Progress Indicator

The GPI is used for green economics, sustainability, ecological economics, and more inclusive types of economics commonly known

as welfare economics.

  GPI includes

• economic contributions of households

• volunteer work, crime, pollution and family breakdown

GPI takes into account more than twenty aspects of our economic lives as the GDP.

Happy Planet Index

The Happy Planet Index shows the relative efficiency with which nations convert the

planet’s natural resources into long and happy lives for their citizens.

• First Index measure the environmental efficiency

• three separate indicators

• life expectancy

• life-satisfaction

• ecological footprint

Thank you for your attention !