Notes on Beyond GDP: HDI, Better Life Index, and Genuine Progress Indicator

GDP (Gross Domestic Product)

Measures the value of final goods and services produced within a country. Formula: $GDP = C + I + G + NX$

Consumption (C)

A component of GDP, representing household spending on goods and services.

Investment (I)

A component of GDP, representing business spending on capital goods, structures, and inventory.

Government Spending (G)

A component of GDP, representing government expenditures on goods and services.

Net Exports (NX)

A component of GDP, calculated as exports minus imports.

Human Development Index (HDI)

A composite index created by the United Nations to assess development based on health, education, and standard of living (GNI per capita).

HDI Health Dimension

Measured by life expectancy at birth.

HDI Education Dimension

Measured by mean years of schooling for adults aged 25+ and expected years of schooling for children of school entering age.

HDI Standard of Living Dimension

Measured by Gross National Income (GNI) per capita, using a logarithmic transformation.

Logarithm of GNI per capita in HDI

Used to reflect the diminishing marginal impact of income increases on human development.

Better Life Index (BLI)

An index developed by the OECD focusing on people's well-being across 11 topics, covering material living conditions and quality of life.

BLI Material Living Conditions

Topics include housing, income, and jobs.

BLI Quality of Life Topics

Topics include community, education, environment, governance, health, life satisfaction, safety, and work-life balance.

Genuine Progress Indicator (GPI)

An alternative measure that adjusts GDP by including environmental and social factors, weighing economic costs (e.g., pollution) and benefits (e.g., volunteering).

GPI Components

Includes economic factors (personal expenditures, income inequality), environmental factors (ozone depletion, climate change), and social factors (crime, family breakdown, volunteering).

Green GDP

An alternative or supplementary approach to GDP that accounts for environmental costs (e.g., resource depletion and environmental degradation).

Happy Planet Index

An alternative measure that combines life expectancy, experienced well-being, and ecological footprint to assess human well-being and environmental impact.