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GEOG 352: Day 13

GEOG 352: Day 13. Alternative Measures of Well-being (Chapter 14). Housekeeping Items. I’m working on the exams, but it will be a while. I am up to my eyeballs.

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GEOG 352: Day 13

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  1. GEOG 352: Day 13 Alternative Measures of Well-being (Chapter 14)

  2. Housekeeping Items • I’m working on the exams, but it will be a while. I am up to my eyeballs. • The Geography Department is hosting a session on what you need to know about grad school with past graduates and faculty members sharing their experience this Wednesday in Room 217 at 10:30. Please come along and check it out. • Did anyone go to hear the Oxfam guy in Imogene’s class or to the Food Forum in Duncan? How about the protest in Victoria? • If you want to see a brief video interview with the Pakistani girl activist who was nearly killed by the Taliban, see https://www.change.org/en-CA/petitions/nobel-peace-prize-for-malala?alert_id=LDgSKyzIzt_ZBJyyadrwu&utm_campaign=12319&utm_medium=email&utm_source=action_alert • Today we will discuss Chapter 14 and hear from Caitlyn.

  3. Housekeeping Items On Thursday we will talk about needs vs. satisfiers. In the meantime, do some thinking about the distinction between needs and wants or alternative ways of meeting real needs.

  4. Alternatives to GNP/ GDP Don’t get too intimidated by this chapter. We are only going to pluck out a few points. The authors claim that ecological economics makes optimal scale more important than economic growth. This is followed by fair distribution as a secondary, but very important, goal. They introduce GNP (“all production by [domestic] citizens [and permanent residents] whether at home or abroad”) and GDP (“all production with the geographic borders [of a country], whether by [residents] or by foreigners”).

  5. Alternatives to GNP/ GDP Another way of measuring GDP is the total value of all goods and services produced by a nation in a year(excluding imports). GDP= private consumption + gross investment + government spending + (exports−imports). GDP per capita is adjusted for purchasing power parity. According to Wikipedia, this is “how much money would be needed to purchase the same goods and services in two different countries.” To take the example of housing, Country A could have a lower GDP per capita than Country B, but its housing could be far more affordable; hence their PPP might be close to one another.

  6. GDP Per Capita (PPP Adjusted), 2007

  7. Alternatives to GNP/ GDP Typically, growth in GNP or GDP has been seen as a reflection of society’s overall economic and social well-being. Simon Kuznets, one of its developers, warned Congress in 1934 that “the welfare of a nation can scarcely be inferred from a measurement of national income.” In 1962, he was more explicit: “distinctions must be kept in mind between quantity and quality of growth. Goals of ‘more growth’ should always specify more growth of what and for what purpose.”

  8. Alternatives to GNP/ GDP • The critics who feel that GDP is an inadequate measure of national well-being point to a number of inclusions and omissions: • It includes spending on various 'bads', such as dealing with crime and its consequences; the health conse-quences of air pollution, car crashes, smoking, and junk food; spending on weapons and war, and cleaning up after pollution and environmental disasters, including oil spills (see p. 250) • It ignores resource depletion and the degradation of natural capital; • It ignores the contribution of the household and voluntary sectors; • It doesn't examine economic inequality, and • It fails to take into account quality of life issues.

  9. Alternatives to GNP/ GDP • Two key categories here of items that should be subtracted from GDP/ GNP are natural resource depletion and defensive expenditures. • The first is rather obvious. The second is defined as “those [expenditures] we have to make to protect ourselves from the unwanted consequences of the production and consumption of goods by other people” (p. 270). • This can range from individuals having to spend money on asthma medication because of transportation-related air pollution to protecting ourselves against crime to governments having to clean up abandoned mine sites or major oil spills. In some cases – indeed, many – the full costs are borne by future generations.

  10. Alternatives to GNP/ GDP • The authors also talk about the fact that GDP/ GNP makes no distinction between truly sustainable income and capital consumption. A store and all its equipment, furniture and stock is the capital which generates an income for its owner. If he or she liquidates a part of that capital to subsidize a major booze or cocaine binge, then they seriously undermine their ability to derive an income in the future. • Because of these weaknesses, a number of alternative measures of social (and ecological) well-being have been developed. These include: Gross National Happiness, Happy Planet Index, Index of Sustainable Economic Welfare and, more recently, the Genuine Progress Indicator.

  11. Alternatives to GNP/ GDP • Measure of Economic Welfare (MEW)—The MEW is the work of Yale University economists William Nordhaus and James Tobin. They developed their Measure of Economic Welfare back in 1972 as one of the first attempts to address the shortcomings of GDP. • Index of Economic Well-being (IDEW) — This index is the work of the Ottawa-based Centre for the Study of Living Standards. It's a weighted average of four main components of economic well-being: consumption flows, stocks of wealth, inequality, and indicators of economic insecurity like unemployment and poverty in old age. • Genuine Progress Indicator (GPI)—The GPI was developed in 1995 by Redefining Progress, a private research institute based in California. It arrives at its Genuine Progress Indicator by taking GDP figures and then adjusts them to take into account income distribution, and other factors.

  12. Alternatives to GNP/ GDP • Index of Sustainable Economic Welfare (ISEW)—Developed in 1989 by Herman Daly and John Cobb, the ISEW takes into account private spending on defence (a negative), domestic housework (a positive), the costs of environmental harm (a negative), and corrects for income inequality. • Human Development Index (HDI)—This index is the work of the United Nations Human Development Report. It ranks the world's countries on three main aspects of human development: health, knowledge (education), and standard of living. • Happy Planet Index (HPI)—The Happy Planet Index was developed by the British-based New Economics Foundation to, in their words, "show the relative efficiency with which nations convert the planet's natural resources into long and happy lives for their citizens.” • Finally, in 1972, the King of Bhutan came up with the Gross National Happiness (GNH) indicator that he felt would be in tune with his country's Buddhist values.

  13. Question for Discussion If you were wanting to evaluate how healthy and happy a society is, how would you go about it?

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