Beyond GDP: Classifying Alternative Measures for Progress

Both the potential pitfalls of macro-economic policies focused on stimulating economic growth and the problems involved in
using GDP as a measure of well-being or economic welfare have long been recognized by economists and researchers from other
social sciences. Therefore, it is no surprise that alternative measures for policy-making have been developed and promoted
since the early 1970s. Over the past 5 years, the development of these measures has gained momentum both politically and academically.
However, most research efforts concentrate on the development and promotion of individual indicators, while paying less attention
to the wide range of indicators already available and to theoretical insights. As a result, few classification schemes of
alternative measures exist today to help policy-makers in selecting a proper set of indicators. This paper first looks into
the different classification schemes available in the literature and outlines the weaknesses in each of these. Afterwards,
an alternative classification scheme is introduced that draws on the notions of well-being, economic welfare and sustainability.
A further sub-categorization is built on the different approaches that are used to quantitatively capture the notions. By
focusing on the underlying concepts that the different measures aim to quantify, the alternative classification scheme overcomes
the drawbacks of the existing schemes. Finally, 23 alternative measures for policy-making are reviewed and organized into
the newly developed classification scheme.