Summary: Challenges & Solutions - Week 4 Efb Mcm

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Read the summary and the most important questions on Challenges & Solutions - Week 4 EFB MCM

  • 1 Kubiszewski et al., 2013

  • Nations need indictors that measure progress towards achieving what goals?

    Economic, social and envionrmental goals.
  • What is GDP (gross domestic product) a great measure for? And what has it mistakenly been used for?

    To measure the economic aspect but it has been mistakenly used as a broader measure to measure welfare.
  • Even though GDP was never designed to measure social or economic welfare, as what indicator is it most commonly used for today?

    A country's overall performance.
  • What are the biggest problems with GDP? List the 3

    • Interprets every expense as positive and does not distinguish between welfare enhancing and welfare reducing activities.
    • Leaves out components that enhance welfare but do not involve monetary transactions.
    • Does not account for the distribution of income among individuals
  • What is an alternative measure to the GDP? How many components does it hold?

    GPI (Genuine Process Indicator), it holds 24 different components.
  • What does GPI measure?

    Measures of economic welfare generated by economic activity, in conjunction with other measures (environmental costs, crime, volunteering...).
  • What is GPI not an indicator of?

    Sustainability
  • How does GPI better approximate sustainable economic welfare?

    By separating activities that diminish welfare from those that enhance it.
  • Should the measure of economic welfare be used alone?

    No, in conjunction with other measures.
  • 1.1 Critiques of GPI

  • What are the 5 critiques that have been taken up in the article for GPI?

    1. Uses inappropriate valuation methods to estimate some GPI items
    2. Assumes that human-made capital and natural capital are substitutes
    3. Includes some important welfare-related items but overlooks others, such as the benefits of political freedom
    4. Is subjective in its choice of components to include
    5. Lacks a solid theoretical basis.

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