Editing Genuine progress indicator (section)

{{Short description|Enhances Economic / Well-Being indicators}}
[[File:GDP vs GPI in US.jpg|thumb]]
'''Genuine progress indicator''' ('''GPI''') is a [[Performance metric|metric]] that has been suggested to replace, or supplement, [[gross domestic product]] (GDP).<ref>{{Cite journal|last1=Kubiszewski|first1=Ida|last2=Costanza|first2=Robert|last3=Franco|first3=Carol|last4=Lawn|first4=Philip|last5=Talberth|first5=John|last6=Jackson|first6=Tim|last7=Aylmer|first7=Camille|date=September 2013|title=Beyond GDP: Measuring and achieving global genuine progress|journal=Ecological Economics|volume=93|pages=57–68|doi=10.1016/j.ecolecon.2013.04.019|bibcode=2013EcoEc..93...57K |s2cid=17390700 |issn=0921-8009|url=http://www.bioline.org.br/abstract?id=nd13075}}</ref> The GPI is designed to take fuller account of the [[well-being]] of a nation, only a part of which pertains to the size of the nation's economy, by incorporating environmental and social factors which are not measured by GDP. For instance, some models of GPI decrease in value when the [[poverty]] rate increases.<ref name="turk-and-bensel">{{cite book | title=Contemporary Environmental Issues| url=https://books.google.com/books?id=gBzZXwAACAAJ| last=Bensel| first=Terrence|author2=Turk, Jon| year=2011| publisher=Bridgepoint Education| id=1935966154|isbn = 9781935966159}}</ref> The GPI separates the concept of societal progress from [[economic growth]].

The GPI is used in [[ecological economics]], "green" economics, sustainability and more inclusive types of economics. It factors in [[environmental footprint|environmental]] and [[carbon footprint]]s that businesses produce or eliminate, including in the forms of [[resource depletion]], [[pollution]] and long-term environmental damage.<ref name="turk-and-bensel" /> GDP is increased twice when pollution is created, since it increases once upon creation (as a side-effect of some valuable process) and again when the pollution is cleaned up; in contrast, GPI counts the initial pollution as a loss rather than a gain, generally equal to the amount it will cost to clean up later plus the cost of any negative impact the pollution will have in the meantime. While quantifying costs and benefits of these environmental and social [[Externality|externalities]] is a difficult task, "Earthster-type databases could bring more precision and currency to GPI's metrics."<ref name="turk-and-bensel" /> It has been noted that such data may also be embraced by those who attempt to "internalize externalities" by making companies pay the costs of the pollution they create (rather than having the government or society at large bear those costs) "by taxing their goods proportionally to their negative ecological and social impacts".<ref name="turk-and-bensel" />

GPI is an attempt to measure whether the environmental impact and social costs of economic production and consumption in a country are negative or positive factors in overall health and well-being. By accounting for the costs borne by the society as a whole to repair or control pollution and poverty, GPI balances GDP spending against external costs. GPI advocates claim that it can more reliably measure economic progress, as it distinguishes between the overall "shift in the 'value basis' of a product, adding its ecological impacts into the equation".<ref name="turk-and-bensel" />{{rp|Ch. 10.3}} Comparatively speaking, the relationship between GDP and GPI is analogous to the relationship between the gross profit of a company and the net profit; the net profit is the gross profit minus the costs incurred, while the GPI is the GDP (value of all goods and services produced) minus the environmental and social costs. Accordingly, the GPI will be zero if the financial [[Cost of poverty|costs of poverty]] and pollution equal the financial gains in production of goods and services, all other factors being constant.