Transcript GEOG 352: Day 13?

GEOG 352: Day 13
Alternative Measures of Well-being (Chapter 14)
Housekeeping Items





I’m working on the exams, but it will be a while. I am up to
my eyeballs.
The Geography Department is hosting a session on what you
need to know about grad school with past graduates and
faculty members sharing their experience this Wednesday in
Room 217 at 10:30. Please come along and check it out.
Did anyone go to hear the Oxfam guy in Imogene’s class or
to the Food Forum in Duncan? How about the protest in
Victoria?
If you want to see a brief video interview with the Pakistani
girl activist who was nearly killed by the Taliban, see
https://www.change.org/en-CA/petitions/nobel-peace-prizeformalala?alert_id=LDgSKyzIzt_ZBJyyadrwu&utm_campaign=12
319&utm_medium=email&utm_source=action_alert
Today we will discuss Chapter 14 and hear from Caitlyn.
Housekeeping Items

On Thursday we will talk about needs vs. satisfiers. In the
meantime, do some thinking about the distinction
between needs and wants or alternative ways of meeting
real needs.
Alternatives to GNP/ GDP
Don’t get too intimidated by this chapter. We are
only going to pluck out a few points. The authors
claim that ecological economics makes optimal scale
more important than economic growth. This is
followed by fair distribution as a secondary, but very
important, goal.
 They introduce GNP (“all production by
[domestic] citizens [and permanent residents]
whether at home or abroad”) and GDP (“all
production with the geographic borders [of a
country], whether by [residents] or by foreigners”).

Alternatives to GNP/ GDP


Another way of measuring GDP is the total value of all
goods and services produced by a nation in a
year(excluding imports). GDP= private consumption +
gross investment + government spending +
(exports−imports).
GDP per capita is adjusted for purchasing power parity.
According to Wikipedia, this is “how much money would
be needed to purchase the same goods and services in
two different countries.” To take the example of housing,
Country A could have a lower GDP per capita than
Country B, but its housing could be far more affordable;
hence their PPP might be close to one another.
Alternatives to GNP/ GDP


Typically, growth in GNP or GDP has been seen
as a reflection of society’s overall economic and
social well-being.
Simon Kuznets, one of its developers, warned
Congress in 1934 that “the welfare of a nation
can scarcely be inferred from a measurement of
national income.” In 1962, he was more explicit:
“distinctions must be kept in mind between
quantity and quality of growth. Goals of ‘more
growth’ should always specify more growth of
what and for what purpose.”
Alternatives to GNP/ GDP
 The
critics who feel that GDP is an inadequate measure
of national well-being point to a number of inclusions
and omissions:
 It includes spending on various 'bads', such as dealing
with crime and its consequences; the health consequences of air pollution, car crashes, smoking, and junk
food; spending on weapons and war, and cleaning up
after pollution and environmental disasters, including oil
spills (see p. 250)
 It ignores resource depletion and the degradation of
natural capital;
 It ignores the contribution of the household and
voluntary sectors;
 It doesn't examine economic inequality, and
 It fails to take into account quality of life issues.
Alternatives to GNP/ GDP
 Two
key categories here of items that should be
subtracted from GDP/ GNP are natural resource depletion
and defensive expenditures.
 The first is rather obvious. The second is defined as
“those [expenditures] we have to make to protect
ourselves from the unwanted consequences of the
production and consumption of goods by other people”
(p. 270).
 This can range from individuals having to spend money
on asthma medication because of transportation-related
air pollution to protecting ourselves against crime to
governments having to clean up abandoned mine sites or
major oil spills. In some cases – indeed, many – the full
costs are borne by future generations.
Alternatives to GNP/ GDP
 The
authors also talk about the fact that GDP/ GNP
makes no distinction between truly sustainable income and
capital consumption. A store and all its equipment,
furniture and stock is the capital which generates an
income for its owner. If he or she liquidates a part of that
capital to subsidize a major booze or cocaine binge, then
they seriously undermine their ability to derive an income
in the future.
 Because of these weaknesses, a number of alternative
measures of social (and ecological) well-being have been
developed. These include: Gross National Happiness, Happy
Planet Index, Index of Sustainable Economic Welfare and,
more recently, the Genuine Progress Indicator.
Alternatives to GNP/ GDP
Measure of Economic Welfare (MEW)—The MEW is the
work of Yale University economists William Nordhaus and
James Tobin. They developed their Measure of Economic Welfare
back in 1972 as one of the first attempts to address the
shortcomings of GDP.
 Index of Economic Well-being (IDEW) — This index is the
work of the Ottawa-based Centre for the Study of Living
Standards. It's a weighted average of four main components of
economic well-being: consumption flows, stocks of wealth,
inequality, and indicators of economic insecurity like unemployment
and poverty in old age.
 Genuine Progress Indicator (GPI)—The GPI was
developed in 1995 by Redefining Progress, a private research
institute based in California. It arrives at its Genuine Progress
Indicator by taking GDP figures and then adjusts them to take
into account income distribution, and other factors.

Alternatives to GNP/ GDP
Index of Sustainable Economic Welfare (ISEW)—Developed
in 1989 by Herman Daly and John Cobb, the ISEW takes into
account private spending on defence (a negative), domestic
housework (a positive), the costs of environmental harm (a
negative), and corrects for income inequality.
 Human Development Index (HDI)—This index is the work of
the United Nations Human Development Report. It ranks the
world's countries on three main aspects of human development:
health, knowledge (education), and standard of living.
 Happy Planet Index (HPI)—The Happy Planet Index was
developed by the British-based New Economics Foundation to, in
their words, "show the relative efficiency with which nations
convert the planet's natural resources into long and happy lives for
their citizens.”
 Finally, in 1972, the King of Bhutan came up with the Gross
National Happiness (GNH) indicator that he felt would be in
tune with his country's Buddhist values.

Question for Discussion

If you were wanting to evaluate how
healthy and happy a society is, how would
you go about it?