ROI, EPS, and GDP are acronyms under attack.
From big picture to smaller picture, these acronyms all give order of magnitude value to the financial return of our efforts as humans on this earth.
I’m going to start with the big picture, GDP, and look at the developing alternatives to a one number view of a country’s well being.
GDP: Gross Domestic Product which is the value of private consumption, gross investment, government spending, and total exports minus total imports. Consumers drive this measure of global growth, with 60-70% of GDP in the US made up with purchases of things and services over the past 50 years. Recent reports on sluggish GDP lament slack consumer demand, and cross fingers and hope that resurgent future consumer behavior will “save everything.”
So why is such a number so hated? GDP is under suspicion for not measuring the true standard of living of an economy, leaving out relative shifts in worker income at home and abroad, the effects of all this spending on scarce environmental resources, not to mention the relative happiness of the citizens.
A number of replacement metrics have been set forth by government groups, activist organizations, countries, and economists looking recast what economic health really means. All of them seek to develop a new metric for economic vitality, translated into a squishy, hard-to-measure value like happiness, equity, and environmental health. Always interested in the efforts of those that wish to put numerical values on the most squishy parts of life, I’ll be investigating the following GDP alternatives:
Happy Planet Index (HPI)
Human Development Index (HDI)
Genuine Progress Indicator (GPI)
Gross National Happiness (GNH)
GINI Coefficient (Gini)
Which one will replace GDP headlines in the WSJ or in your future Flipbook Social News Feed?