Measuring Genuine Progress inState and Local Economies

Jon EricksonRubenstein School of Environment and Natural Resources,

and the Environmental Program

University of Vermont

The total value of all final goods and services

produced in an economy in a one-year period.

Household Firms (production

Factor services

Goods

Investment(3)

Personal consumption(4)

Savings(3)

Imports(5)Exports(5)

(2)GovernmentSpendingTaxes(2) Government

Financial markets

Other countries

Wages, rents, interest, profits(1)

Gross Domestic Product

World GDP, 1500-1992

0

2000

4000

6000

8000

10000

12000

14000

15

00

15

25

15

50

15

75

16

00

16

25

16

50

16

75

17

00

17

25

17

50

17

75

18

00

18

25

18

50

18

75

19

00

19

25

19

50

19

75

Re

al W

orl

d G

DP

(1

50

0=

10

0)

1992 = 11,664

1950 = 2,238

1900 = 823

1820 = 2901500 = 100

Source: J.R. McNeil, Something New Under the Sun, Table 1.1.

World Population Since 1820

0

1

2

3

4

5

6

71

82

0

18

40

18

60

18

80

19

00

19

20

19

40

19

60

19

80

20

00

Po

pu

lati

on

(b

illio

n)

1820 = 1

1850 = 1.21900 = 1.6

2000 = 6.0

1950 = 2.5

1990 = 5.3

Source: J.R. McNeil, Something New Under the Sun, Table 1.3.

Per Capita World GDP, 1500-1992

0

1000

2000

3000

4000

5000

60001

50

0

15

25

15

50

15

75

16

00

16

25

16

50

16

75

17

00

17

25

17

50

17

75

18

00

18

25

18

50

18

75

19

00

19

25

19

50

19

75

19

90

Do

llars

1500 = 5651820 = 651

1900 = 1263

1950 = 2138

1992 = 5145

Source: J.R. McNeil, Something New Under the Sun, Table 1.2.

U.S. Real Gross Domestic Product, 1920–1998U.S. Real Gross Domestic Product, 1920–1998

Source: U.S. Department of Commerce, Historical Statistics of the United States, 1976; and Economic Report of the President, 1998, 1999.

Does GDP = Welfare?

The gross national product does not allow for thehealth of our children, the quality of their education,or the joy of their play. It does not include the beautyof our poetry or the strength of our marriages; theintelligence of our public debate or the integrity ofour public officials. It measures neither our wit norour courage; neither our wisdom nor our learning;neither our compassion nor our devotion to ourcountry; it measures everything in short, except thatwhich makes life worthwhile.

~Robert F. Kennedy, 1968

Another Measure of the 20th Century

Item

Increase

Factor

1890s-1990s

Item

Increase Factor

1890s – 1990s

World population 4 Water use 9

Urban proportion of . . . 3 Marine fish catch 35

Total world urban pop. 13 Cattle population 4

World economy 14 Pig population 9

Industrial output 40 Horse population 1.1

Energy use 16 Blue whales (S. Ocean) 0.0025

Coal production 7 Fin whale population 0.03

Air pollution ~5 Bird and mammal species 0.99

Carbon dioxide emiss. 17 Irrigated area 5

Sulfur dioxide emissions 13 Forest area 0.8

Lead emiss. to atmosph. ~8 Cropland 2

Source: J.R. McNeil, Something New Under the Sun, Table 12.1.

Top 1% Share of Household Wealth 1922-1997

36.7

44.2

33.3

36.4

29.8

27.1

31.2 31.8

34.4

31.1

29.1

19.9 20.5

24.8

30.931.9

35.737.2

38.540.1

1922 1929 1933 1939 1945 1949 1953 1962 1965 1969 1972 1976 1979 1981 1983 1986 1989 1992 1995 1997

Source: Edward Wolff, Top Heavy, 1996, New Series Households date pp. 78-79 (1992-1989), “Recent Trends in Wealth Ownership”, 1998 (1992-1997). CF Economic Apartheid in America, Collins and Yeskel, 2000, P. 56.

1947 to 1979-Real Family Income Growth by Quintile and for top 5%

116%

100%

111%114%

99%

86%

0%

20%

40%

60%

80%

100%

120%

140%

Bottom 20% Second 20% Middle 20% Fourth 20% Top 20% Top 5%

Source: Economic Apartheid in America, Collins, Yeskel, p. 42, 44.

1979-1998 Real Family Income Growth by Quintile and for Top 1%

-5%

3%8%

15%

38%

106%

-20%

0%

20%

40%

60%

80%

100%

120%

Bottom 20% Second 20% Middle 20% Fourth 20% Top 20% Top 1%

Source: Economic Apartheid in America, Collins, Yeskel, p. 42, 44.

Is there a better measureof genuine economic progress?

US

40

90

140

1940 1960 1980 2000

UK

40

90

140

1940 1960 1980 2000

Germany

40

90

140

1940 1960 1980 2000

Austria

40

90

140

1940 1960 1980 2000

Netherlands

40

90

140

1940 1960 1980 2000

Sweden

40

90

140

1940 1960 1980 2000

Chile

40

90

140

190

240

1940 1960 1980 2000

Indices of ISEW (Index of SustainableEconomic Welfare) and GDP (1970 = 100)

ISEW (or GPI) by Column:A: Personal ConsumptionB: Income DistributionC: PC adj. for Income Distr.D: Value of Household LaborE: Value of Volunteer WorkF: Services of Household CapitalG: Services of Highways and Streets

H: Cost of CrimeI: Cost of Family BreakdownJ: Loss of Leisure TimeK: Cost of UnderemploymentL: Cost of Consumer DurablesM: Cost of CommutingN: Cost of Household Pollution AbatementO: Cost of Automobile AccidentsP: Cost of Water PollutionQ: Cost of Air PollutionR: Cost of Noise PollutionS: Loss of WetlandsT: Loss of FarmlandU: Depletion of Nonrenewable ResourcesV: Long-Term Environmental DamageW: Cost of Ozone DepletionX: Loss of Forest Cover

Y: Net Capital InvestmentZ: Net Foreign Lending and Borrowing

1. Income: (Columns A, B, C)Alan Adams and Tyson Kerr

2. Households (Columns D, E, F, L, N)Kendra Schmiedeskamp and Jessica Hike

3. Mobility (Columns G, M, O)Christian Adams and Keith Montone

4. Social Capital (Columns H, I, J, K)Walter Tusinski and Lauren Sparacino

5. Pollution (Columns P, Q, R)Benjamin Altschuler and Stephanie Balter

6. Land loss (Columns S, T, X)Brendan Fisher and Joseph Kelly

7. Natural Capital (Columns U, V, W)Megan McCauley and Michael Rauch

8. Net Investment (Columns Y, Z) Dan Saxton and Laurel Williams

GPI Functional Groups and Authorsfor this study

Summary Results for Four Spatial Scales

GPI/capita at all four scales

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1950 1960 1970 1980 1990 2000

Year

$/c

ap

ita

Burlington

Chittenden

Vermont

US

Detail

Detailed Reports are available at:

The detailed, column by column report: www.uvm.edu/~jdericks/GPI/GPIdetails.doc

The master spreadsheet: www.uvm.edu/~jdericks/GPI/GPIspreadsheet.xls

Thanks to:

Burlington Legacy Project Champlain Initiative Dozens of local and state contacts

An Ecological Economics Capital Stock Approach to Quality of Life Assessment in

Burlington, Vermont, USA

Joseph Kelly and Jon D. EricksonJoseph Kelly and Jon D. EricksonRubenstein School of Environment and Natural ResourcesRubenstein School of Environment and Natural Resources

University of VermontUniversity of Vermont

and the Fall 2003 Introduction to Ecological Economics class:and the Fall 2003 Introduction to Ecological Economics class:

C. Andrews, J. Antonucci, S. Augeri, E. Berliet, M. Birkby, W. Brennan, E. Brown,C. Andrews, J. Antonucci, S. Augeri, E. Berliet, M. Birkby, W. Brennan, E. Brown,M. Brundige, M. Buechler, M. Cohen, C. Coleman, C. Coogan, A. Cooper, K. Costello,M. Brundige, M. Buechler, M. Cohen, C. Coleman, C. Coogan, A. Cooper, K. Costello,

M. Crane, A. D'Aversa, A. Davis, J. DeCelles, A. Delgado, M. DiBiccari, H. Dudley,M. Crane, A. D'Aversa, A. Davis, J. DeCelles, A. Delgado, M. DiBiccari, H. Dudley,J. Dye, A. Effler, M. Egbers, P. Freeman, M. Gilmartin, E. Graves, M. Hall,J. Dye, A. Effler, M. Egbers, P. Freeman, M. Gilmartin, E. Graves, M. Hall,

C. Hancock, E. Harrison, E. Hartz, K. Hayes, C. Herold-Lind, R. Holthaus, D. Hubbard,C. Hancock, E. Harrison, E. Hartz, K. Hayes, C. Herold-Lind, R. Holthaus, D. Hubbard,H. Johansson, L. Junger, B. Kelly, A. Kirschner, A. Klein, M. Martin, I. Marvin,H. Johansson, L. Junger, B. Kelly, A. Kirschner, A. Klein, M. Martin, I. Marvin,C. McCreight, B. O'Donoghue, M. Palmer, B. Parke, A. Pearlstein, J. Randall,C. McCreight, B. O'Donoghue, M. Palmer, B. Parke, A. Pearlstein, J. Randall,

C. Reeves, D. Rosa, C. Smith, J. Smith, R. Sterling, C. Sullivan, T. Van Etten, T.,C. Reeves, D. Rosa, C. Smith, J. Smith, R. Sterling, C. Sullivan, T. Van Etten, T.,A. Verinis, P. Virchick, A. Voinov, J. WatersA. Verinis, P. Virchick, A. Voinov, J. Waters

Photo: Anton Voinov

11-111-2

8-1

8-2

10-1

10-2

9-19-29-3

7-1

7-2

6-16-2

4-1

4-34-2

5-1

5-2

5-3

3-1

3-2

1-1

1-2

2-1

2-2

2-32-4

Eight Neighborhoods

1 – New North End

2 – Old North End

3 – Downtown

4 – Collegetown

5 – Northeast

6 – The Hill

8 – South End

7 – Pine Street

Survey Questions

I. Neighborhood Identity

II. Built Capital

III. Natural Capital

IV. Human Capital

V. Social Capital

VI. Total Quality of Life

VII. Demographics

Photo: Anton VoinovDetail

Built Capital

How How importantimportant are the things you own or rent (for are the things you own or rent (for example, your home, car, furniture, clothes, etc.) to example, your home, car, furniture, clothes, etc.) to your happiness and quality of life? your happiness and quality of life?

Photo: Anton Voinov

Built Capital Importance(Burlington)

30%

46%

15%

6%3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

VeryImportant

Important NeitherImportant orUnimportant

Unimportant VeryUnimportant

Mean = 2.07Std. Dev. = 0.98

Natural Capital

How How importantimportant is the quality of the natural is the quality of the natural environment in which you live (for example, air, environment in which you live (for example, air, water, open space, cleanliness) to your happiness water, open space, cleanliness) to your happiness and quality of life? and quality of life?

Natural Capital Importance(Burlington)

63%

26%

8%

2% 2%0%

10%

20%

30%

40%

50%

60%

70%

VeryImportant

Important NeitherImportant orUnimportant

Unimportant VeryUnimportant

Mean = 1.53Std. Dev. = 0.83

Human Capital

How important are investments made in yourself (for example, education, job skills, health, spirituality) to your happiness and quality of life?

Photo: Anton Voinov

Human Capital Importance (Burlington)

65%

28%

5%1% 2%

0%

10%

20%

30%

40%

50%

60%

70%

VeryImportant

Important NeitherImportant orUnimportant

Unimportant VeryUnimportant

Mean = 1.46Std. Dev. = 0.77

Social CapitalHow important are relationships with your family and

friends to your happiness and quality of life?

How important are interactions with people in your neighborhood to your happiness and quality of life?

Social Capital Importance(Family & Friends, Burlington)

80%

16%

2% 1% 2%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

VeryImportant

Important NeitherImportant orUnimportant

Unimportant VeryUnimportant

Mean = 1.28Std. Dev. = 0.70

Social Capital Importance(Neighbors, Burlington)

17%

35%34%

11%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

VeryImportant

Important NeitherImportant orUnimportant

Unimportant VeryUnimportant

Mean = 2.49Std. Dev. = 1.01

Total Quality of LifeHow would you rate your overall quality of life (on a scale from

1 [very high] to 5 [very low])?

Please distribute 100 points across the following four categories according to their importance to your overall quality of life.

Personal and public investments in your home, lifestyle, and neighborhood

Investments and access to the natural environment in or near your neighborhood

Your personal well-being and investments made in yourself

Your relationship with your family, friends, and community

Photo: Anton Voinov

Total Quality of Life Happiness(Burlington)

35%

47%

10%

6%2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Very Happy Happy NeitherHappy orUnhappy

Unhappy VeryUnhappy

Mean = 1.91Std. Dev. = 0.90

Distribution of Importanceof Capital Stocks

Built20%

Natural18%

Human26%

Social36%

Are you happy with your current family or personal yearly income?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

under 15 15-30 30-60 60-120 over 120

No

Yes

Percent “Yes” for Burlington = 66%

If not, how much more income per yearwould you need to be satisfied?

0

10

20

30

40

50

60

under 5K 5-10K 10-25K 25-50K 50-100K 100K-1Million

over aMillion

Overall Quality of Life (All)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

under15 15-30 30-60 60-120 over120

Very happy or happy Neither, unhappy, or very unhappy

Student Effect?

Testing the Income Effect

Overall Quality of Life (w/o Students)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

under15 15-30 30-60 60-120 over120

Very happy or happy Neither, unhappy, or very unhappy

Without Students21% of respondents

Testing the Income Effect

Neighborhood Analysis

Total Quality of Life andHappiness with Capital Stocks

0.00

0.50

1.00

1.50

2.00

2.50

Burlin

gton

New N

. End

Old N

. End

Downt

own

Colleg

e To

wn

North

east

The H

ill

Pine S

treet

South

End

Av

era

ge

Ha

pp

ine

ss

Sc

ore Total Quality of Life

Built Capital

Natural Capital

Human Capital

Social Capital

1.00

2.00

3.00

4.00

5.00

Total Qualityof Life

Built Capital NaturalCapital

HumanCapital

SocialCapital1

(Friends &Family)

SocialCapital2

(Neighbors)

Avera

ge S

co

re(1

=n

ot

at

all

to

5=

very

gre

atl

y)

Burlington I ntentional Communities

Burlington v. EcoVillages

Evolving analysis and results posted at:

www.uvm.edu/~jdericks/QOL/

Photo: Anton Voinov