Finance:GDP 3.0

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GDP 3.0 is an economic indicator intended to replace the Gross Domestic Product, which is the main macroeconomic indicator in the System of National Accounts (SNA).[1] Rather than simply adding together all expenditures like the gross domestic product, GDP 3.0 is balanced by such factors as income distribution and cost associated with environmental degradation.[2][3][4]

GDP 3.0 is roughly defined by the following formula:

GDP 3.0 = (Weighted personal consumption + Circular, household and community work +
                  Capital formation (incl. forestry and biodiversity) + Other positive contributions − Environmental deterioration) X 1/Palma ratio

where the Palma ratio, after Chilean economist José Gabriel Palma, is defined as : Top decile's income ÷ bottom four deciles' income.[5][6]

GDP 3.0 was first proposed by professor Serge Pierre Besanger[7] in a Straits Times article dated 21 December 2019.[8][9][10]

Notes

  1. "System of National Accounts". https://unstats.un.org/unsd/nationalaccount/sna.asp. 
  2. Nordhaus, W. and Tobin, J. (1972) Is growth obsolete?. Columbia University Press, New York
  3. Johnson, D.L., S.H. Ambrose, T.J. Bassett, M.L. Bowen, D.E. Crummey, J.S. Isaacson, D.N. Johnson, P. Lamb, M. Saul, and A.E. Winter-Nelson. 1997. Meanings of environmental terms. Journal of Environmental Quality 26: 581–589.
  4. Daly, H. & Cobb, J. (1989), For the Common Good. Beacon Press, Boston.
  5. "José Gabriel Palma re-examines the ‘Palma Ratio' at the IBEI | IBEI". https://www.ibei.org/en/jose-gabriel-palma-re-examines-the-palma-ratio-at-the-ibei_46738. 
  6. Wuppertal Institute. "Alternatives to GDP for Measuring Progress" (PDF). Wuppertal Institute. Retrieved 6 January 2017
  7. "Demographic change in Asia :" (in en). 2000. https://digitallibrary.un.org/record/435162. 
  8. "Death by GDP - how the climate crisis is driven by a growth yardstick". The Straits Times. 21 December 2019. https://www.straitstimes.com/opinion/death-by-gdp-how-the-climate-crisis-is-driven-by-a-growth-yardstick. 
  9. Hamilton C. (1999) "The Genuine Progress Indicator: methodological developments and results form Australia", Ecological Economics, vol. 30, pp. 13–28
  10. Hoffrén J. (2001) "Measuring the Eco-efficiency of Welfare Generation in a National Economy. The Case of Finland." Statistics Finland. Research Reports 233. Helsinki. pp. 107–109.

Journal citations