Genuine Progress Indicator for California: 2010–2014.

In this paper, we estimate the Genuine Progress Indicator (GPI), which is a measure of sustainable economic welfare, for California for a five-year period, 2010–2014. This relatively short time period, which covers the recovery from a deep recession, allows us to examine how integration of environmental degradation, nonmarket activities, and inequality affects the GPI of California. The California GPI is only 52% of Gross State Product (GSP) – comparable to other GPI to GDP proportions – because the large negative environmental components offset the large positive social components and because many government expenditures, such as those related to defence and law enforcement, are excluded. Between 2010 and 2014, California GSP grew 9.2% and GPI grew 9.8%. We evaluate our estimation of the California GPI (CA-GPI) in two specific ways. First, we compare California’s GPI to an alternative indicator of social welfare, the Human Development Index (HDI) for California. Our comparison points out that the GPI is a more holistic measure of sustainable economic well-being, although the HDI is useful for evaluating educational attainment, life expectancy, or earnings across regions or demographic groups in the state. Second, we compare our estimation of CA-GPI to the California results from a recent GPI estimation for all fifty states for 2011, in order to evaluate how different methodological decisions and data selection affect the results. Our overall estimate is 13 percent higher, with the primary differences reflecting discrepancies in methodological assumptions or data sources in the calculation of a few key variables, including the value of time used for calculating nonmarket activities. These two estimates of CA-GPI allow us to analyze the sensitivity of two widely used approaches for calculating the GPI, and the sensitivity of using California-specific public data sources compared to national public data sources (scaled to California). The variation in the two California GPI estimations demonstrates the importance of standardizing the method and the data sources, with the goal of creating a viable alternative to the GDP for measuring economic performance. Comparison of the two GPI estimations shows how the use of region-specific data increases the accuracy of estimates, which is important for evaluating regional outcomes and trends over time. However, using data and method that prioritizes standardization is essential for cross-regional comparability, even though the trade-off is diminished regional accuracy. The paper concludes with a discussion of the uses of the GPI to evaluate policies, and suggests fruitful steps forward. [ABSTRACT FROM AUTHOR]