Frequently Asked Questions

1. Does GPIAtlantic’s GPI aggregate into a single number?

2. How do I calculate the GPI for my country/city/region/community?

3. What methodology does GPIAtlantic use?

4. How is GPIAtlantic’s Genuine Progress Index different from the ones calculated by Redefining Progress or the Pembina Institute?

5. How is GPIAtlantic’s work different from the Canadian Index of Wellbeing?

6. Has GPIAtlantic’s work been used by governments?

Answers:

1. Does GPIAtlantic’s GPI aggregate into a single number?

GPIAtlantic does not aggregate all of the components of its Genuine Progress Index into a single number. Instead, we have a detailed research report on each component of the GPI and we are now working on the development of an integrated set of key headline indicators drawn from all our research of the last ten years, as well as a comprehensive overview document linking the various GPI components into a coherent and inter-connected whole.

This reluctance to aggregate stems from a recognition that the valuation of resources that are traditionally outside the paid market economy (e.g. a standing forest or unpaid work in the home) can be controversial and that any aggregation depends on weighting diverse measures that are not always comparable.

The original U.S. GPI did produce a dollar figure for each of its 26 components, and then aggregated those results into a single monetary value for the purpose of comparison with the GDP. GPIAtlantic, by contrast, has identified two separate tasks that rely on two quite different methodologies and approaches:

(1) To measure progress over time, we rely on primary, non-monetary indicators like the age class of forests, crime rates, or the number of hours of unpaid work rather on derived monetary equivalents. This is because dollar figures cannot adequately measure progress. For example, how would defensive expenditures to restore environmental damage be classified? These types of expenditures compensate for a past decline, but they also do produce an improvement in conditions. It is difficult to assess whether this should be counted as progress or not.

(2) To demonstrate that social and environmental assets and liabilities do have economic benefits and costs, we have also undertaken economic valuations based on the primary indicators where possible. For example, unpaid work can be given an economic value by estimating the number of hours of unpaid work and the value that work would have if it was paid in the market economy. Conventional accounting systems such as the Gross Domestic Product (GDP) fail to account for the value or depreciation of natural, human, and social capital. GPIAtlantic has undertaken this econonmic valuation to address the need to move beyond primary indicators of these forms of capital, such as described in (1) above, to a more comprehensive set of national and provincial accounts. However, since valuations of non-market resources are still frequently in the early stages of development, we believe that aggregating the GPI into a single dollar value at this present developmental stage may have the unintended effect of actually undermining the credibility of the GPI in the long run.

We have also noted issues with the comparability of data of different types and from different time series, with the subjective weighting of the individual components that might make up an aggregate index, and with limitations in data availability for some indicators. All of these factors make the calculation of an aggregate number challenging. While a comprehensive assessment of total national wealth (and its depreciation) is an excellent goal, and we applaud the efforts of others to develop this assessment, GPIAtlantic has found money to be an inadequate tool to assess such wealth accurately, and the methodological challenges of aggregation have led us to avoid this exercise to date.

2. How do I calculate the GPI for my country/city/region/community?

Because GPIAtlantic does not aggregate all of the components of its Genuine Progress Index into a single number, the calculation of the GPI for a specified area is based more on a perspective and approach than on a numeric calculation. This perspective is simply that an accurate assessment of wellbeing and wealth requires valuing a full range of natural, social, human, and economic assets. It is therefore critical of measures of progress based on a very narrow range of standard economic indicators (such as the Gross Domestic Product). From that perspective, any measurement work that you do in your region or neighbourhood that takes into account the health and education of the population, the quality of the environment, the safety and strength of your community, etc. – and that recognizes that these assets have economic value and contribute to prosperity – is GPI work.

For example, you might look at economic growth in your area critically using a GPI perspective. If the GDP has increased, what does the GPI tell us about that increase? Is it fuelled by a decline in natural capital, such as depleted forests or fisheries? The more trees you cut down and the more fish you catch and send to market, the more the economy will grow, since GDP only counts what we extract from our natural resources, not what we leave behind. Does the economic growth in your area result in increasing greenhouse gas emissions, which contribute to climate change – the costs of which are ignored in our conventional accounts? Or is economic development in your region based on conservation and energy savings, or on investment in human capital, like improving population health and education?

These are just a few examples of the kinds of questions an analysis using the GPI perspective could ask. In other words, don't worry about calculating one overall GPI number for your community or region. The key issue is to analyze policy, development, and economic realities where you live using a comprehensive GPI approach that takes into account a more complete range of environmental, social, economic, and cultural factors than do our standard GDP-based measures of progress.

3. What methodology does GPIAtlantic use?

Although all of our work is based on the GPI perspective that values a wide range of environmental, economic, and social factors, GPIAtlantic does not apply a single methodology to all the measures and economic valuations used in our reports. Instead we have tried to identify the method most appropriate to each study.

For example, to calculate the economic value of voluntary work, we identified the specialist replacement method as the most appropriate, given data availability. For the value of unpaid household work, we used the generalist replacement method. In fact, GPIAtlantic's report on unpaid work outlines six different potential valuation methods to demonstrate how the use of different methodologies produces different results.

To assess the costs of crime, we used some replacement value methodologies for the non-market values, but relied largely on direct market valuations for most of the costs. Some of the environmental reports also refer to contingent valuations.

GPIAtlantic strives to be completely transparent about the methodologies selected and the rationale for the choice. All of this detailed information can be found in our individual reports.

4. How is GPIAtlantic’s Genuine Progress Index different from the GPIs calculated by Redefining Progress or the Pembina Institute?

The primary difference between GPIAtlantic 's work and that of Redefining Progress and the Pembina Institute is that we do not aggregate our index into a single number. Redefining Progress calculates a monetary value for the GPI based on additions to and subtractions from the same personal consumption data used to calculate the Gross Domestic Product (GDP). The Pembina Institute calculates an aggregate numeric index that includes all 51 components of its GPI, based on trends from 1961 to the present and indexed to benchmark years representing 100 for the best values in that time span

GPIAtlantic has chosen not to aggregate all the components of its Genuine Progress Index into a single number (see FAQ #1 above). Instead, we have one or more detailed research reports on each component of the index, and we are now working on developing a set of integrated headline indicators and a comprehensive overview document linking these components together.

5. How is GPIAtlantic’s work different from the Canadian Index of Wellbeing?

Over the past two years, GPIAtlantic has been a key partner and deeply involved in the research and development of a new national index, the Canadian Index of Wellbeing (CIW). The CIW is based on principles similar to the GPI, and is made up of seven key domains: Healthy Populations, Living Standards, Ecosystem Health, Time Allocation, Community Vitality, Education, and Good Governance. The CIW is intended to help measure Canada's genuine progress and to provide Canadians with a clear, valid, and regular accounting of the things that matter to them. In their indicator work, the GPI and CIW have a very similar focus, approach, and methods.

The primary current difference between the CIW and GPIAtlantic’s Genuine Progress Index (GPI) is that the CIW is presently focused solely on the development of indicators. The GPI adds additional economic valuation work to its indicator development in an effort to move beyond indicators to a full benefit-cost accounting system that takes social, economic, and environmental benefits and costs into account. This challenges conventional accounting systems based on the Gross Domestic Product (GDP), which is not so much an indicator system as an accounting system.

It is important to note that the CIW also intends to eventually move beyond indicators to a national accounting system in which natural, social, human, and economic capital will all be valued. As CIW economic valuation work proceeds in the future, it is expected that GPIAtlantic's work and the Canadian Index of Wellbeing work will likely become increasingly integrated.

6. Has GPIAtlantic’s work been used by governments?

GPIAtlantic has worked closely with both provincial and federal governments in areas such as health promotion (including efforts to overcome tobacco use, obesity, and physical inactivity by assessing their costs) and solid waste management (where a full-cost accounting approach has demonstrated net benefits to society). GPIAtlantic has also undertaken full-cost accounting work for governments in assessing the economic benefits of greenhouse gas reductions, on the proposed sewage plants for Halifax Harbour, and on other issues. We also make every effort to consult with and include government stakeholders in our work through their participation on our advisory councils and steering committees for research projects and in direct collaboration on projects.

Our work is also often used by governments. For example, the release of our Cost of Chronic Disease in Nova Scotia report in 2002 was a key factor in the provincial government's decision to create a new office of Health Promotion under a separate minister. GPIAtlantic 's report on the Economic Impact of Smoke-Free Places was also a key factor in the development of legislation banning smoking in public places in Nova Scotia . GPIAtlantic 's work is currently referenced in the Nova Scotia Department of Economic Development's latest economic development strategy, entitled Opportunities for Sustainable Prosperity 2006 (40 page, 1.9MB PDF).

Over the last two years, GPIAtlantic has also been involved in providing assistance in the development of a comprehensive set of indicators for the country of Bhutan. The Bhutanese National Assembly has mandated the development of indicators that will measure Bhutan 's progress and its unique development path across a wide range of social, economic, health, cultural, and environmental dimensions. This project could have important implications for the way that nations measure their progress, as Bhutan is poised to become the first sovereign government in the world officially to adopt new measures of progress that account for social, human, and natural capital in addition to the conventional economic indicators. As well, GPIAtlantic has developed an assessment of measures of progress for New Zealand's Ministry of Social Development, and has worked closely with federal and municipal government agencies in that country in an advisory capacity on indicators of wellbeing.