Frequently asked questions

1. What is the 'Beyond GDP' initiative?
2. What does GDP measure?
3. What does GDP not measure?
4. What are the measures that go beyond GDP?
5. What is the quality of the measures that go beyond GDP?
6. Are the measures that go beyond GDP widely accepted?
7. What is the role of measures that go beyond GDP in policy-making?
8. What are important people saying about GDP and measuring progress?

FAQ 1: What is the 'Beyond GDP' initiative?

Spurred on by the success of the 2007 conference, the Beyond GDP partners continue to work on improving measures of progress, wealth and well-being.

This website reflects this effort and aims to share information more widely on recent developments and ongoing work on indicators to assess social, economic, and environmental progress.

FAQ 2: What does GDP measure?

GDP - Gross Domestic Product - measures the monetary value of all goods and services that are produced within a nation during a given period and sold to consumers, government, investors or are exported.

In addition, part of the production used for own consumption is included - e.g. agricultural products used by the farmers themselves. However, products sold to other domestic producers for further processing are not included - i.e. GDP measures end-products only.

Being a monetary value measure, GDP therefore represents the part of the population's well-being that comes from consumption of goods and services sold on established markets - i.e. selling apples to a neighbour is in most cases not a part of GDP.

FAQ 3: What does GDP not measure?

Being a monetary value measure, GDP does not cover goods and services that cannot or have not been put a value on by the statistical authorities - i.e. so-called non-market goods and services. Examples of these are household production, entrance-free beach visits, and wildlife viewing. In other words, it does not measure well-being that goes beyond GDP, including environmental and social aspects of economic activities.

Furthermore, GDP, as an overall measure of economic welfare, does not reveal inequality concerns - e.g. the consumption possibilities of the poor compared with those of the rich.

Finally, although investments contribute to GDP, they only concern the year the spending is made. For this reason, investments only to a limited extent account for the gains and losses in natural, economic and social assets - which are important aspects from a long-term sustainable development perspective.

FAQ 4: What are the measures that go beyond GDP?

Measures that go beyond GDP cover environmental and social aspects of well-being that have not been accounted for by the GDP measure (for what GDP does not measure, see the answer to FAQ 3). Examples of these alternative measures are:

• Enlarged GDP indicators start from GDP (or other figures from the System of National Accounts) but adjust for some of its shortcomings to deliver a more comprehensive overview of a country’s wealth or well-being.
• Social indicators give insights into a broad range of social issues, concerns and trends such as life expectancy, poverty rates, unemployment rates, disposable income, and education levels, etc. They are also used to give insights into broader notions of social progress.
• Environmental indicators cast light over the state and development of issues such as natural resources, environmental pollution and waste, as well as related issues such as human health.
• Well-being indicators are used to broadly illustrate people’s general satisfaction with life, or give a more nuanced picture of quality of life in relation to their jobs, family life, health conditions, and standards of living.

Note that such grouping of measures involves unavoidable overlaps. More on these measures can be found under indicators.

FAQ 5: What is the quality of the measures that go beyond GDP

The quality differs from measure to measure and greatly depends on the underlying data sources and methodology used, and each measure has both strengths and weaknesses that are valuable to know when using it.

Indicators that rely on the use of official statistics tend to be more accurate, coherent and comparable. For example, the strength of measures such as enlarged GDP is that they often build on officially available data that is regularly updated. The weakness, on the other hand, is that there are limits to what is officially available and thus what can be included in the measure.

As a contrast, subjective well-being measures have the strength that they directly address the well-being issue that is in focus. A weakness is that subjective opinions often depend on cultural factors and are thus difficult to compare e.g. across EU Member States.

Another example is that composite indices have the strength of showing a complete picture, while a weakness is that the weighing of individual indicators often is criticized for not being "objective".

FAQ 6: Are the measures that go beyond GDP widely accepted?

The extent of acceptance differs from measure to measure . Wide acceptance is most likely of measures that have been used for some time and clearly show how they complement the GDP measure. Least wide acceptance is for new untested, exploratory measures which still have to prove their worth for e.g. policy decisions.

Hence, for a given policy decision targeted at a certain well-being issue, it is of course beneficial that at least key stakeholders accept the well-being measure that will be used for assessment whether or not the policy decision was successful.

In this context, it should be underlined that the Beyond GDP initiative informs about a wide range of well-being measures - some more widely accepted than others, and this is done to both cater for those who want to go beyond GDP and to reach out to those who are sceptical about doing so.

FAQ 7: What is the role of measures that go beyond GDP in policy-making?

The role of measures that go beyond GDP in policy-making is at least twofold. On the one hand, they can be used by politicians to better monitor and evaluate progress in our society, taking into account environmental sustainability or social inclusion, which are not covered by GDP. On the other hand, these measures can be used to better communicate in a clear way that a given policy may target or affect many other elements of the society than economic activity.

Therefore, there is a demand by politicians to have both specific indicators that are relevant for a given policy and more aggregated composite indices that can be communicated to the general public in a few words.

FAQ 8: What are important people saying about GDP and measuring progress?

Read interesting quotes on GDP and measuring progress, true wealth and well-being by important people who have questioned the usefulness of GDP for measuring welfare.