New alternative to GDP measures social outcomes, not income
May 14, 2013 Editor 0
The latest alternative to GDP does something interesting: it ignores money. That’s not because money doesn’t matter—it’s because money is only as good as whatever it can buy.
Everyfewmonths, someone comes up with a new alternative to gross domestic product, the ubiquitous measure of national success that even its inventor never embraced. This month the respected Harvard professor Michael Porter, father of the catchphrase “shared value,” jumped in the game with an index of his own: the Social Progress Index.
Here’s Porter’s guiding principle: Instead of making any attempt to balance financial metrics, such as income, against social outcomes, such as clean water, SPI simply measures the outcomes.
As reported by the Guardian, Porter “believes past indices have failed because they have tried to mix economic metrics with social metrics.”
The problem with this system, of course, is that everyone wants to make his own list of desirable outcomes. Porter’s new organization chooses to track “nutrition and basic medical care; air, water and sanitation; shelter; personal safety; access to basic knowledge; access to information and communication; health and wellness; ecosystem sustainability; personal rights; access to higher education; personal freedom and choice; and equity and inclusion.”
The result, though, is a selective ranking that makes intuitive sense: Sweden leads the way, followed by the United Kingdom, Switzerland, Canada, Germany and the United States. At the bottom, with half the leaders’ scores, are Uganda, Nigeria and Ethiopia.
Interestingly, as the Guardian notes, “no countries score in the top half for all 12 components of the index.”
It’s possible that alternatives to GDP will be to the 21st century what Esperanto was to the 20th—beloved by idealists but impossible to agree on. But if SPI or another outcome-based measure somehow became the universal language of global policy, it’s hard to imagine the world ever returning to GDP.Harvard Business School professor and corporate strategy theorist Michael Porter has an idea for helping societies evaluate themselves: instead of measuring money itself, measure the things money can buy. Photo: World Economic Forum (Flickr)
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