The Efficacy of the Genuine Progress Indicator

I'm teaching macro principles right now for the first time in about six years and it is really interesting to get back into. Right now we're talking about GDP, the way it is measured and its use, etc. Along with Prof. Anderson, I also introduce other measures of a country's well-being, including the Genuine Progress Indicator. A group called "Redefining Progress" critiques the GDP "as a shorthand indicator of progress; but the GDP is merely a sum of national spending with no distinctions between transactions that add to well-being and those that diminish it."

The group has gone to great lengths to create this new indicator (the GPI) that measures other factors that go into a country's well-being. "The GPI starts with the same personal consumption data that the GDP is based on, but then makes some crucial distinctions. It adjusts for factors such as income distribution, adds factors such as the value of household and volunteer work, and subtracts factors such as the costs of crime and pollution."

All of this is well and good, however, I have a little homework assignment that makes one wonder if it is all worth it. Number 3 on the assignment asks students to use data that I gathered from the World Development Report and find correlation coefficients between the GDP, the GPI, the HDI and the Gender Development Index.

You'll have to do the homework to see the point I'm trying to make!