A new report that could revolutionize the way North Carolina, and the nation, calculates its progress was released this month.
Gross National Happiness USA is a non-profit organization that works to measure economic well-being in a way that goes beyond the standard measurements like GDP, or Gross Domestic Product.
The goal of Gross National Happiness USA, or GNHUSA, is to “increase personal happiness and our collective well-being by changing how we measure progress and success.”
Juhi Modi is a UNC student who has been working with GNHUSA since the summer. Modi recently helped to produce the first-ever state report on the Genuine Progress Indicator (GPI) of North Carolina.
“The GPI is a comprehensive measure of economic well-being,” Modi said. “It differs from GDP in that it includes environmental, social and additional economic indicators.”
These 26 positive and negative indicators include a variety of social indicators like lost leisure time and volunteer work, economic indicators such as income inequality and adjusted personal consumption and environmental indicators like noise pollution and climate change.
This North Carolina report calculated these economic indicators from 2005 to 2018. Over that time period, Modi said the GPI grew 35 percent.
According to the GNHUSA, the GPI is a metric designed to take fuller account of the well-being of a nation by incorporating environmental and social factors instead of solely focusing on the health of the nation’s economy.
“For example, if crime increases, people buy more security systems and the GDP actually increases,” Modi said. “On the other hand, GPI decreases to correct for costs like that that are not included in the GDP.”
Modi said the largest cost driving the disparity between the GPI and the GDP comes from income inequality, environmental degradation and lost leisure time. In her report, lost leisure time increased as the average worker spent 21 more hours at work and had 10 fewer hours of leisure time in 2018 than in 2005.
She said the GDP has components that only measure the goods and services that are exchanged – which in turn paints an incomplete picture of the economy and our state’s and nation’s well-being. Modi said because the GPI takes into account environmental and social factors, it is overall more accurate than the GDP – especially when looking at the reports data from 2005 to 2018.
“It’s important to note that the GPI per capita was only half as large as the GDP per capita over that time period,” Modi said. “That’s primarily due to environmental costs that were included in the GPI and not in the GDP. Additionally while the GDP per capita grew 34 percent by 2018, the GPI per capita only grew 13 percent.”
Modi said North Carolina is not alone in these disparities. She said most states have a GPI that is 40 to 50 percent lower than the GDP. To help bridge these disparities, some states, like Maryland, are adopting the GPI to better inform their policy decisions.
“Vermont, Hawaii, Washington and Minnesota are some other states that have been tracking it (GPI) and leaders of those states are actually interested in finding out how the GPI can be used to inform budget decisions and policy decisions,” Modi said.
Moving forward, Modi said formal policy changes need to occur to better serve the public and accurately measure progress. These changes might include establishing a more progressive statewide income tax system, increasing the minimum wage and reducing the consumption and depletion of non-renewable energy resources.
For more information on Gross National Happiness USA, and to read the North Carolina Genuine Progress Indicator report, click here.
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