GDP measures economic output, but it says nothing about environmental degradation, health outcomes, educational attainment, or whether growth is shared broadly. Several alternative indicators attempt to fill these gaps.
Genuine Progress Indicator (GPI)
The Genuine Progress Indicator starts with personal consumption (like GDP) but then adjusts for factors that GDP ignores:
- Adds value for: household work, volunteering, services from consumer durables
- Subtracts costs of: crime, pollution, family breakdown, loss of leisure time, depletion of natural resources
- Adjusts for: income inequality (a dollar matters more to lower-income families)
Studies have found that while U.S. GDP grew substantially since the 1970s, GPI has remained relatively flat—suggesting that much of our economic "growth" has been offset by environmental and social costs.
Human Development Index (HDI)
The Human Development Index, created by the United Nations, measures well-being across three dimensions:
- Health: Life expectancy at birth
- Education: Expected years of schooling and mean years of schooling
- Standard of living: Gross National Income per capita (adjusted for purchasing power)
HDI reveals that economic output alone does not determine quality of life. Some countries with lower GDP per capita outperform wealthier nations on health and education outcomes.
Inclusive Development Index (IDI)
The Inclusive Development Index, developed by the World Economic Forum, evaluates economies on three pillars:
- Growth and Development: GDP per capita, labor productivity, employment
- Inclusion: Median household income, income and wealth inequality, poverty rate
- Intergenerational Equity: Adjusted net savings, public debt, dependency ratio, carbon intensity
The IDI explicitly asks: Is growth being shared? Are we borrowing from future generations? Countries can score well on GDP but poorly on inclusion or sustainability.
Why We Don't Track These (Yet)
These indicators offer valuable perspectives, but they have practical limitations for our household-focused mission:
- Update frequency: GPI, HDI, and IDI are typically updated annually or less often. Our metrics update monthly or quarterly.
- Geographic scope: These are national-level measures. They don't show variation by region, income level, or household type.
- Complexity: The methodologies involve many assumptions that reasonable people can debate.
The Bigger Picture
No single metric captures everything that matters. GDP measures output but not distribution or sustainability. Our household metrics show immediate impacts on families but not long-term environmental costs or health outcomes.
These alternative indicators remind us that economic well-being is multidimensional. A complete picture requires looking at multiple measures—including ones that question whether "more" always means "better."