Measuring national economic performance without using prices

Recent years have seen increasing awareness of the deficiencies of conventionally defined national income as a measure of a nation's overall economic performance. Alternative measures have been proposed involving either the modification of national income accounting conventions, or the abandonment of national income itself in favour of something such as the Genuine Progress Indicator, GPI. However, such alternatives, like national income itself, all involve the use of monetary valuation for aggregation. This paper proposes a new approach to the measurement of national economic performance, which follows naturally from ecological economics as the study of economic activity rooted in a proper appreciation of its material circumstances, and which does not involve using prices for aggregation. The paper gives some results for three variants of the new approach, and compares and discusses them. While this new approach does not purport to provide a single definitive assessment of the sustainability of current economic activity, which is an infeasible goal, it could provide useful inputs to relevant research activity, and to policy analysis and debate. (c) 2007 Elsevier B.V. All rights reserved.