Economy Sustainable Development

Q: What is GDP?

A: Gross Domestic Product: the total monetary value of all goods and services produced within a country’s borders over a specific period.

Q: What is GDP used for?

A: It is the main indicator of economic performance and growth.

Why is GDP an inaccurate measure of well-being?

A: It doesn’t account for quality of life, sustainability, or environmental degradation.

Q: What problematic events increase GDP?

A: Oil spills, war, crime, divorce, natural disasters – all treated as economic “gains.”

Q: What does GDP ignore?

A: Household labour, volunteer work, natural capital depletion, income distribution, environmental costs.

Q: What is uneconomic growth?

A: Growth where the costs (environmental, social, economic) exceed the benefits, making society worse off overall.

Q: What are utility and disutility?

A: Utility = satisfaction/well 

Disutility = sacrifices required to increase production/consumption.

Q: What is marginal utility?

A: Extra satisfaction gained from consuming one additional unit; decreases as consumption rises.

Q: What is marginal disutility?

A: Extra sacrifice needed for each additional unit consumed; increases with consumption.

Q: What is the optimal scale of consumption?

A: Where marginal utility = marginal disutility (before disutility exceeds utility).

Q: What is GPI?

A measure of sustainable economic welfare that adjusts GDP by adding positive non-market contributions and subtracting social/environmental costs.

Q: What positive contributions does GPI include?

A: Volunteer work, household labour, renewable resource services, parenting/care work.

Q: What costs does GPI subtract?

A: Pollution, resource depletion, crime, family breakdown, loss of farmland/wetlands, long commuting, environmental damage.

Q: How does GPI differ from GDP?

A: GDP counts all spending as positive; GPI adjusts for real social and environmental impacts to reflect genuine well

Q: Why is GPI important?

A: It more accurately measures progress by including sustainability, equity, and long

Q: What is the income threshold effect?

A: After basic needs are met (≈$10k), more income does not increase happiness, even though GDP rises.

Q: What is Doughnut Economics?

A: A framework (Kate Raworth) combining a “social foundation” and an “ecological ceiling” to show the safe and just space for humanity.

Q: What is the goal of Doughnut Economics?

A: Meet everyone’s needs without exceeding planetary boundaries; prioritize well

Q: How is Doughnut Economics related to planetary boundaries?

A: It integrates them—exceeding ecological limits undermines social foundations (e.g., climate change undermines access to food and health).

Q: Is economic growth always necessary?

A: No. Beyond a point, additional growth doesn’t improve well

Q: Why can’t one country alone adopt Doughnut Economics easily?

A: GDP would drop, making the country appear “less developed” in global rankings.

Q: What is Herman Daly’s main argument?

A: The economy is a subsystem of a finite biosphere; beyond a point, growth destroys natural capital faster than it creates man

Q: Why must we shift away from uneconomic growth?

A: To avoid ecological catastrophe and maintain long

Q: What does Daly mean by “the sustainable economy must stop growing but need not stop developing”?

A: Qualitative improvements (efficiency, equity, innovation) can continue without increasing resource throughput.

Q: Why is the BP oil spill an example of GDP’s flaws?

A: Cleanup spending increased GDP, but GDP ignored ecological destruction and long

Q: What do GPI comparisons show about rich vs. poor countries?

A: Low