The Genuine Progress Indicator (GPI) provides citizens and policymakers insight into how our environment, society, and economy affect the well-being of people. The GPI is designed to measure sustainable economic welfare rather than just economic activity. To accomplish this, the GPI uses three simple underlying principles for its methodology:
- account for income inequality
- include non-market benefits from the economy, environment, and society that are not included in Gross Domestic Product (GDP) and
- identify and deduct costs such as environmental degradation, human health effects, and loss of leisure time.
The GPI developers identify indicators relevant to these principles then populate them with verifiable data. As one example, the pure economic activity stemming from the explosive growth of urban sprawl contributes greatly to the GDP. Yet, along with sprawl come non-economic costs such as increased commuting time, land use conversion, along with water and air pollution. In short, just because we are exchanging money within an economy does not necessarily mean that we are sustainable or prosperous.
While it has long been realized that GDP is an insufficient measure of wellbeing; even its creator, Simon Kuznets, stated that “The welfare of a nation can scarcely be inferred from a measurement of national income” in 1934. However, that has not prevented GDP’s primacy as the measure of progress. The first effort to improve upon GDP as a measure of progress occurred in 1972, when American economists William Nordhaus and Nobel Prize winner James Tobin developed the Measured Economic Welfare (MEW). Ecological economist Herman Daly (former professor at the University of Maryland, College Park) and theologian John Cobb picked up their work nearly two decades later as they investigated how to develop a macro measure of welfare by creating the Index of Sustainable Economic Welfare (ISEW). The public policy think tank Redefining Progress built upon the work by Daly and Cobb and created the GPI in 1995 and has since been calculated for many countries and states by academics. Maryland became the first U.S. state to formally calculate and maintain GPI accounts in 2010. Other states, like Vermont, Hawaii, Minnesota, and Washington, have since begun tracking their GPI but Maryland is currently the only state which updates the GPI annually.
Maryland Quality of Life Initiative
The Maryland Quality of Life Initiative is a partnership between Maryland businesses, non-profits, academics, and the state with the goal to characterize quality of life in the state and identify ways to improve it. The Maryland Genuine Progress Indicator was identified as a resource to indicate quality of life and a first step in building a “Quality of Life Dashboard” for the state. The initiative held a summit in 2015 bringing together 150 different organizations to address needs for enhancing quality of life in Maryland. Maryland Non-Profits (a “non-profit for non-profits” which helps to organize and advocate for non-profit organizations in Maryland) is the organizing body for the Quality of Life Initiative, and holds an annual Maryland Quality of Life Address, to highlight the state of quality of life in Maryland and current legislative initiatives relevant to the improving quality of life.
Evolution of the GPI Methodology
When the GPI was originally formulated it collected 26 indicators broken in to economic, environmental, and social categories. As our understanding of the costs and benefits of economic activity has grown and better data has become available practitioners recognized the need to update the original methods. The “GPI 2.0” accomplishes this by taking advantage of the increasing availability of data and the most recent scientific understanding of factors influencing our well-being. As an example of the increasing resolution of data available, the amount of money people spend on items in their daily lives was inferred from national data and considered together in GPI 1.0, whereas in 2.0 we were able to consider data gathered for household spending in Maryland broken into 17 categories. This helps us make the determination of what expenditures are contributing to well-being at a finer scale. Recent scientific literature has helped us improve the determination of several indicators, including the cost of inequality, value of ecosystem services, the cost of air pollution, and the cost of noise pollution. We are using spatial data to calculate some indicators, like the extent of forest in Maryland and the cost of air pollution. GPI 2.0 has 12 categories, with 50 indicators spread across them.
The drawback to relying on recently available data is that it often does not extend very far into the past. For this reason, we are only able to present 2012 through 2022 calculated using the GPI 2.0 methodology. Unfortunately very little data is currently available for 2020, likely at least partially due to the COVID-19 pandemic. We maintain the GPI 1.0 results on this website, which extends from 1960 to 2013.
GPI 2.0
Highlights from 2012-2022
Overall the GPI increased by $38.8 billion over this 10 year period, representing an 18.1 % increase. In comparison, the Gross State Product of Maryland rose by $47.68, or 14%, over this same period (normalized for inflation).
Household spending has increased significantly over the 10 year period but this has been balanced by the increase in income inequality, which increased 2020-2022- income increasingly concentrated in returns above $500,000 and spending on defensive expenditures and household investments. Non-market based well being increased nearly 20%, driven by benefits from higher education and unpaid labor, services from natural capital held steady. Environmental and social costs decreased by 14%. Within this category depletion of natural capital decreased by nearly $4 billion or 18%, cost of crime increased by over $1 billion and cost of commuting increased by nearly $3 billion, counteracting decreases in the cost of homelessness ($90 million, 25%), underemployment, $6.45 billion, nearly 57%, and air pollution, over $1.5 billion, approximately 50%.
2019 to 2020 – Impact of the Pandemic
The global coronavirus pandemic’s impact on society is reflected in the GPI indicators in several ways. Household budget expenditures fell by almost 3.5%, almost identical to the decrease in the gross state product from 2019 to 2020. However, this relatively small decrease belies the inequity in how the pandemic impacted people across income classes. The cost of inequality, which assesses the relative distribution of income, increased by 96% from 2019 to 2020. Unfortunately this increased disparity across income classes persisted, and actually increased, both in 2021 and 2022. The 44% increase in low income food and nutrition assistance in 2020 also reflects the impact of the pandemic on lower income families. Other impacts can be seen in the decrease of library services and public art, music, and theater due to pandemic related closures, and the increase in subsistence hunting and fishing as these activities rose in popularity. The cost of underemployment increased tremendously, by ~75%, while costs of greenhouse gas emissions and commuting fell due to fewer people being employed and the rise of teleworking options.
While some of these changes linked to the COVID pandemic had longer lasting impacts, overall the GPI, and GSP, returned quickly to prior levels in 2021.
2021 to 2022 - Recent Change
Overall the GPI experienced moderate growth from 2021 to 2022, rising 0.28%, compared with the GSP growth of 1.57%. Household budget expenditures grew by over 8%, but that was partially offset by growth in defensive expenditures, the cost of income inequality, which grew by 6.5%, and a decline in public expenditures like food and housing assistance of nearly 13%. Overall, market based wellbeing increased by 11%. Non-market based well-being held relatively steady, decreasing by less than 1%. Increases in the value of library services and leisure time likely reflect the continuing recovery from the COVID-19 pandemic. Environmental and social costs rose by nearly 10%. A rise in greenhouse gas emissions, cost of commuting, cost of vehicle accidents and cost of crime reflects the begin of a return to normal activity relative to 2020 and 2021.
Maryland GPI
GPI Per Capita
The GPI per capita in Baltimore was only 62% of the State average in 2012 and 67% in 2013, values from the report by the Center for a Sustainable Economy, Economic Well-Being in Baltimore Report. This reflects the lower average well-being in the city relative to the rest of Maryland.
