Traditional economic measures, like the Gross Domestic Product (GDP) or Gross State Product (GSP) can be misleading indicators of progress. GDP only measures dollars exchanging hands in an economy and does not recognize what those dollars are doing. For instance, the recent Gulf Oil Spill was considered a positive for GDP and ignored the negative environmental and social impacts.
The GPI and similar metrics address the shortcomings of the GDP by including relevant economic, environmental, and social indicators. The GPI subtracts negative impacts such as income inequality, environmental degradation, and crime. Perhaps more importantly, it adds critical non-market contributions to a healthy society, like volunteerism and housework.