👥 Serves: 26-40 people, 41+ people

🎚 Difficulty: Hard

⏳ Total time: Half a day

🥣 Ingredients: Data analyst(s), open-mindedness

🤓 Wholebeing Domains: Bioempathy, Community, Liberatory Learning

💪 Wholebeing Skills: Accountability, Ecosystem harmony, Equity, Flourishing, Non-extracting

👣 Steps

Step 1 – Understand the GPI (1 hour)

The GPI is made up of 26 indicators, related to welfare and sustainability, grouped into three categories: social, economic, and environmental. Each measures a different condition of the economy.

• Social: Examples of factors that negatively impact a community are crime, loss of leisure time, family breakdowns because they impose large economic costs on both individuals and the entire community – due to legal fees, medical expenses, damage to property, etc. These fees are accounted for in the GDP, so negative aspects, in monetary terms are considered growth and beneficial. The GPI strives to change that. Positive social factors include work that is done in household and community settings: childcare, home repairs, volunteer work, and the like. These positive contributions are ignored in the GDP, because no money changes hands. To correct this omission, the GPI includes, among other things, the value of household work figured at the approximate cost of hiring someone to do it.
• Environmental: Examples of factors that negatively affect the environment include any type of pollution to water, air, and noise pollution. It also looks at climate change, ozone depletion and net loss of farmland. Essentially, the GPI takes account of the depletion of natural capital, with the recognition that humans do not live in an economy, but in a society, and that the society itself is embedded in a natural environment, thus sustainable practices are imperative for success. 
• Economic: Examples of factors that negatively affect a society are income inequality and under-employment. Higher unemployment tends to lend itself to a community with less economic stability, poor mental and poor physical health. The GDP strictly measures money, regardless of distribution as a positive. Yet, a dollar to a poor person produces more additional welfare than a dollar to a wealthy person. The GPI, however, accounts for distribution and paints a more accurate picture of welfare. The GPI also accounts for the positives, such as personal expenditure and net capital investments.

You may adapt some indicators to meet the specific needs of your community, but make sure this is done in agreement with everyone in the community.

Step 2 – The GPI equation (2 hours)

What you measure speaks of what is valued in your community. If you fail to count non-monetary and non-material assets, these will be devalued. For example, if a teacher explains that a research paper is “very important”, but it’s worth nothing towards the final grade, the students are likely to think that, in actuality, the research paper is of no value, and will instead devote their time and efforts to the final exam which “counts” towards something. Until communities value wellbeing aspects such as sufficient free time, volunteering, and natural resources, these will never be considered for adequate attention on the public policy agenda. Let’s see how the GPI works in real-time.

If you look again at the image provided in Step 1, you will notice the +/- symbols. This is a little hint towards the equation, as anything with a “–“ is subtracted and “+” is added. The GPI can be calculated with the following equation – which can be completed by the data analyst: GPI = Cadj + G + W − D − S − E – N

• Cadj is the personal consumption adjusted to account for income distribution. 
• G is the growth in capital and net change in an international position.
• W it the non-monetary contributions to welfare (household labour, volunteer work).
• D is the defensive private expenditure.
• S is the depletion of social capital (cost of crime, family breakdown, lost leisure time).
• E is the cost of environmental degradation.
• N is the depletion of natural capital.

The GPI can be used to capture the costs of policies that degrade environmental policy, as well as the benefits of those that improve it, such as those that reduce the costs of pollution or those that reverse the depletion of natural capital through ecological restoration. 

For example, if you consider an urban community, with plenty of growth and established companies – the economy, per the GDP, will see expansive growth. Yet, increased urbanisation can lead to increased commuting, increased traffic congestion, increased pollution, land use conversion,etc. A growing GDP does not mean the community is happy, thriving and living well. It also does not indicate that a community is operating sustainably. This is where the GPI can help a community grow sustainably and thrive.

Step 3 – The GPI benefits (ongoing)

Once determined, it’s important to report on the findings, to motivate communities and possibly other changemakers who are interested in a holistic approach. Ideally, these will be reported quarterly and/or annual when the traditional GDP figures are published, along with explanations and analyses of how the two measurements differ and implications for the long-term sustainability of a community’s economy.  

Another way to showcase the GPI’s usefulness is to immediately incorporate it into the analysis of public policy. New laws, bills, policies, projects require decision-makers to quantify the economic impacts. Instead of quantifying these impacts in traditional terms, with GDP, communities can instead address impacts from the broad sustainability perspective from the new information gathered from the GPI. 

For inspiration on how to support your community through altruistic acts that do benefit a community, check out our recipe “Cultivate a Core Economy” or our recipe “Economic Democracy”, which focuses on sustainable, shared ownership of resources in a community and equal contribution to decision making.