Media Clipping — July 29, 1998, The Ottawa Citizen

Nova Scotia leads effort to improve ways to measure economy

Research group publishes pioneering study using new gauge

HALIFAX—Politicians and economists are quick to quote gross domestic product figures as an indication of how well we're doing, but there is growing recognition that it provides only part of the picture.

A Nova Scotia research group has just published the results of a pioneering effort to provide a better gauge. By including such things as the value of unpaid work and the costs of crime and naturalresource depletion, the Genuine Progress Index delves beyond the GDP's calculation of goods and services exchanged in the marketplace. And Statistics Canada hopes the Nova Scotia model will eventually be used across the country.

"We always tend to think that when GDP rises, it's better for everybody," Hans Messinger, director of industry measures and analysis for Statistics Canada, said from Ottawa. "It's not necessarily better for everybody, and GDP gives no consideration of how well we can maintain that kind of development in the future."

Statistics Canada has designated the Nova Scotia Genuine Progress Index a national pilot project. Developed by the nonprofit research group GPI Atlantic with $120,000 in federal and provincial government funding, it is the first project of its kind in Canada.

GPI Atlantic director Ronald Colman read of the work of three U.S. economists creating a Genuine Progress Index in ~995 and decided to use the concept as a classroom exercise at Saint Mary's University in Halifax. But he soon recognised it had wider potential, pitched the idea to government and left his position teaching political science to work full time on the index.

Now in the second year of the project, GPI Atlantic published its first results this month, calculating the value of volunteer work. Using Statistics Canada timeuse data and multiplying the hours volunteered by the going hourly wage in comparable jobs, the group concluded the 135 million hours in annual volunteer work by Nova Scotians is worth $1.8 billion, or about 10 per cent of the province's GDP. The value for all of Canada was $53.3 billion.

Mr. Colman isn't suggesting volunteers be paid, only that policymakers should be aware of the huge contribution volunteers make.

"Taking care of the sick and elderly, cleaning up the environment, that's work of economic value to our society. If that work did not exist, our standard of life would deteriorate," he said. "Yet it doesn't show up anywhere in our accounting system. It doesn't show up in the GDP, even though it's productive output. It doesn't show up in employment, even though it's work."

The group will be producing a string of reports during the next year looking at 20 indicators, including household work, leisure time, crime costs, greenhouse gas emissions, air pollution, soil quality, forestry and fisheries. Then they will combine the new information into a composite Genuine Progress Index, scheduled for the end of 1999.

Mr. Colman says the model can easily be adapted for use by other provinces and the federal government.

Ultimately, he hopes it will help prevent unsustainable economic development—such as fishing cod to the brink of extinction—that still counts as growth under the GDP.

"It's downright bad accounting to record the depletion of a natural asset as a gain," he said. "It's the equivalent of a factory owner selling off all his machinery and counting it as a profit."

Statistics Canada's Mr. Messinger said the project shows great promise, but he added that it is only at the experimental stage. There is still much debate over what factors should be included in an overall index and how to assign them monetary value. He doesn't see a day where the Genuine Progress Index will supplant the GDP, but it could greatly improve understanding of "how well we're faring as a society," he said.

Copyright © 1998, The Ottawa Citizen

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