Alternative Measures of Economic Growth and Progress

Alternative Measures of Economic Growth and Progress
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The GDP that is the Gross Domestic Product is a measure of economic growth that is used globally. GDP measures an economy's growth by summing up the value of all goods and services produced in an economy in monetary terms CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009). Overall GDP is, therefore, the summation of consumption and government expenditures, net exports, and net capital formation of a country CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
The Deutsche Bank, for example, criticizes the GDP approach as measuring components of the economy that do not promote the people's well-being CITATION Ber06 \l 1033 (Bergheim, 2006). It, therefore, proposes approaches that include non-economic domains and a broad measure that reflects the highest form of happiness for its citizens CITATION Ber06 \l 1033 (Bergheim, 2006).
GDP does not differentiate economic transactions that promote or reduce people's well being or the sustainable and unsustainable transactions in the economy. Therefore, it tallies even the non-required expenditures attributed to aspects such as; crime, environmental degradation, and natural disasters CITATION Tal07 \l 1033 (Talberth, Cobb, & Slattery, 2007). Several approaches have been proposed to replace GDP such as; Measures of Economic Welfare (MEW), the Weighted Index of Social Progress (WISP), and the Human Development Index (HDI) including the Genuine Progress Indicator (GPI) CITATION Ber06 \l 1033 (Bergheim, 2006). However, this paper will focus on the GPI and its impact on economic behavior.
Genuine Progress Indicator
The Genuine progress Indicator (GPI) initially revised from the Sustainable Economic Welfare Index (ISEW) is a guide to welfare promotion economists proposed by Daly and Cobb in 1989 CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009). It takes into account current environmental aspects and use of natural resources and ecosystems in the long term sustainably CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
The GPI, therefore, addresses a broad spectrum of economic activity and welfare and these affect individual businesses and government. GPI covers broad economic areas that lead to certain “behavior” changes. These areas are related to, for example, the environment, crime, leisure time, work done at home, underemployment, accidents, and other life issues CITATION Cos09 \l 1033 (Costanza, Hart, Posner, & Talberth, 2009).
Cost of Crime
The cost of crime especially in this modern society is very high and may be direct (involving property loss or medical expenses) or indirect (psychological trauma or lost opportunities due to fear) CITATION Tal07 \l 1033 (Talberth, Cobb, & Slattery, 2007). Crime costs also include the expenditure on defensive items such as purchasin...