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For a citizen dealing with the realities of daily life, gross domestic product can be a misleading figure. That’s why the genuine progress indicator was created.

Both GDP and GPI use the same personal consumption data. But GPI allows for variables that apply monetary values to non-monetary aspects of the economy.

For example, GPI is adjusted upward when a greater percentage of the nation’s income goes to the poor because an income increase provides a tangible benefit to the poor.

GPI factors in the value of labor that goes into housework and volunteering.

GPI treats money spent on durable goods, such as appliances and furniture, as a cost, and the value it provides is a benefit. Goods that perish quickly are viewed negatively, while GDP views all expenditures as positive news.

GPI views infrastructure spending as a positive if it provides a long-lasting benefit. If it drains the government’s coffers, it’s a negative.

GPI uses economic statistics and math formulas to place a value on many variables. Their value is then added or deducted from GDP. For example, the money foreigners invest in the U.S. is subtracted from what Americans invest overseas, and a 5-year rolling average determines if the U.S. is a lender or borrower. If the number indicates lender, the number is added to GDP.

Since capitalist economies focus on making money, GPI has yet to become widely adopted.

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