Emission Impossible Ltd


Beyond GDP

The New Zealand Genuine Progress Indicator to Measure the Economic, Social and Environmental Dimensions of Well-being from 1970 to 2016

Gross Domestic Product or GDP is widely used to measure the performance of national economies, including New Zealand’s. Many consider it to be the pre-eminent indicator of economic performance. Although the GDP measures the amount of goods and services produced in the economy each year, it is a woeful measure of a country’s well-being. In the GDP, many activities like, for example, a near-shore oil spill might perversely contribute to GDP, when they are clearly not beneficial to society.

The Genuine Progress Indicator seeks to overcome these limitations in the GDP. Through a meticulous process of data collection and analysis and by following international best practice, Massey University and Market Economics Ltd tracked New Zealand’s economic performance since 1970, by using the Genuine Progress Indicator framework. The Genuine Progress Indicator measures 21 benefits and costs associated with economic activity in New Zealand, most of which are not tracked by the GDP. These 21 benefits and costs are first of all converted to monetary terms ($NZ) using standard economic valuation methods; and then ‘added up’ to obtain an overall Genuine Progress indicator for New Zealand for every year over the time period 1970 to 2016.

Overall Results:

The results of this analysis are that the Genuine Progress Indicator shows our societal progress is not as rosy as GDP indicates (refer to Chart A). Overall, on a per capita basis, since 1970 the GDP increased by 91%, whereas the Genuine Progress Indicator, which gives a more accurate measure of the nation’s well-being only increased by 53%.


Chart A National Progress: GDP versus Genuine Progress Indicator (Both Indicators are measured in per capita terms, and then converted to their ‘percentage change since 1970’. By definition, 1970 = 0% change for both indicators).



[Source: Massey University News]