Beyond GDP, name one alternative macro indicator and explain what it attempts to capture.

• A. Gross Domestic Product
• B. Consumer Confidence Index
• C. Human Development Index
• D. Genuine Progress Indicator (GPI) that adjusts for environmental costs and social factors to reflect welfare

Answer: (D)

Measuring welfare requires looking beyond market activity. GDP tallies what the economy produces, but it doesn’t tell us whether people are better off, whether resources are being used sustainably, or how unequal the benefits are. The Genuine Progress Indicator is built to address that gap by starting with economic activity and then adjusting for costs like pollution, environmental depletion, and social drawbacks such as inequality and loss of leisure. It also adds value to non-market activities—like volunteering, caregiving, and home production—that GDP usually overlooks. Because of these adjustments, it aims to reflect true welfare and sustainable prosperity, not just output growth. For example, a rise in GDP from a polluting factory might look favorable in market terms, but GPI would subtract the environmental and health costs, potentially showing little or negative welfare progress. In contrast, the Consumer Confidence Index measures sentiment about the economy, not welfare; the Human Development Index covers health, education, and income but doesn’t explicitly subtract environmental or social costs; GDP remains a pure measure of market activity. So the Genuine Progress Indicator best captures welfare-oriented progress beyond GDP.