Vermont to Establish Genuine Progress Indicator

A True Measure of Economic Well-Being

Because of a law I introduced this year, Vermont will begin measuring our economic well-being in a different way, with a Genuine Progress Indicator (GPI). Vermont will be the first state to use a GPI to help make budget decisions.

To paraphrase Einstein; we won’t solve problems using the same ideas that got us in this mess in the first place. So, unlike traditional economic indicators that only measure what we buy and sell, the Genuine Progress Indicator puts a real economic value on other important factors, like the cost of water pollution and the benefits of safe communities.

This makes the GPI a truer measure of our economic, social and environmental well being. And using the GPI to measure the impacts of our policy decisions will help us build a better state budget, based on what is really happening to our families, environment and economy.

Since World War II, we’ve measured economic progress with the Gross Domestic Product, which only tracks commercial transactions. Many economists, including its originator, now admit the GDP is an inadequate and misleading measure of true prosperity.

Consider that over the last 20 years Vermont’s Gross Domestic Product was strong, growing 40%. And, total personal income grew 55%. But, median family income, the number that counts for most of us, went up a measly 3%. That’s because most of the new income went to those who were already wealthy. As long as they kept buying cars, boats, homes, stocks and bonds, vacations and gadgets the GDP went up, but, what about the rest of us. The strong GDP doesn’t do much for families struggling just to pay the bills and doesn’t look so good stacked against increasing poverty, hunger and empty storefronts. And, GDP ignores ongoing environmental costs like water pollution and climate change. In fact, a toxic waste spill could boost GDP, because it creates jobs to clean up the mess, but ignores environmental and health costs. A crime wave that requires hiring more police would likewise boost GDP, because GDP is like a business that looks at gross income but never subtracts costs.

Vermont’s Genuine Progress Indicator will be different, measuring over 20 factors that impact our economy, our health, our environment, communities and families; things we really value, not just things we buy. The University of Vermont’s Gund Institute for Ecological Economics will work with state government to develop the GPI to assist us in decision-making, provide another basis for budget decisions and identify public policy priorities, including measures such as human rights. And, the GPI will be on-line for all to see and use.

You can download a one-page, primer about the Vermont Genuine Progress Indicator, prepared by UVM’s Gund Institute:

Vermont’s GPI will build and improve upon an earlier GPI developed for Maryland, that can be viewed at