The Genuine Progress Indicator for the transition economies of the Baltic States: reflections on economic welfare and methodological choices
- 1Environment and Natural Resources, Faculty of Economics, University of Iceland, Gimli, Sæmundargötu 2, 102 Reykjavík, Iceland; Corresponding author.
- 2Environment and Natural Resources, Faculty of Life and Environmental Sciences, University of Iceland, Gimli, Sæmundargötu 2, 102 Reykjavík, Iceland
- 3Environment and Natural Resources, Faculty of Economics and Faculty of Environment and Life Sciences, University of Iceland, Oddi, Sæmundargötu 2, 102 Reykjavík, Iceland
Abstract
The Baltic States of Estonia, Latvia, and Lithuania have experienced rapid Gross Domestic Product (GDP) growth since the collapse of the Soviet Union and subsequent transition from planned to market economy, reporting increasing levels of consumption and subjective wellbeing but persistent income inequality, which raises the question of whether economic expansion has translated into genuine welfare improvements. The study provides the first application of an updated Genuine Progress Indicator (GPI) framework to the Baltic States for the period 1995-2023. To assess the robustness of the results, a sensitivity analysis of the components with the greatest influence on GPI values was conducted: valuation of leisure time, the cost of carbon, and the income inequality adjustment. The analysis reveals that economic welfare measured by the GPI has generally exceeded GDP across all three countries in the study period, apart from 2023 in Estonia and Lithuania, offering indications that the welfare returns of additional economic growth might be diminishing. However, the extent to which the GPI exceeds or falls below GDP varies considerably depending on parameter choices. The sensitivity of the GPI to assumptions regarding hourly wages, carbon cost, and inequality baselines highlights methodological challenges that makes cross-country comparisons difficult. These findings caution against uncritical use of the GPI in policy settings and highlight the need for methodological standardisation and clearer valuation guidelines if the metric is to serve as a credible tool for assessing progress beyond GDP.
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BibTeX
@article{malinauskaite2026genuine,
title = {{The Genuine Progress Indicator for the transition economies of the Baltic States: reflections on economic welfare and methodological choices}},
author = {Laura Malinauskaite and David Cook and Brynhildur Davíðsdóttir},
journal = {Ecological Indicators},
year = {2026},
month = oct,
doi = {10.1016/j.ecolind.2026.115154},
url = {https://doi.org/10.1016/j.ecolind.2026.115154},
note = {CC BY},
}
RIS
TY - JOUR
TI - The Genuine Progress Indicator for the transition economies of the Baltic States: reflections on economic welfare and methodological choices
AU - Laura Malinauskaite
AU - David Cook
AU - Brynhildur Davíðsdóttir
PY - 2026
DA - 2026/10/23
JO - Ecological Indicators
DO - 10.1016/j.ecolind.2026.115154
UR - https://doi.org/10.1016/j.ecolind.2026.115154
AB - The Baltic States of Estonia, Latvia, and Lithuania have experienced rapid Gross Domestic Product (GDP) growth since the collapse of the Soviet Union and subsequent transition from planned to market economy, reporting increasing levels of consumption and subjective wellbeing but persistent income inequality, which raises the question of whether economic expansion has translated into genuine welfare improvements. The study provides the first application of an updated Genuine Progress Indicator (GPI) framework to the Baltic States for the period 1995-2023. To assess the robustness of the results, a sensitivity analysis of the components with the greatest influence on GPI values was conducted: valuation of leisure time, the cost of carbon, and the income inequality adjustment. The analysis reveals that economic welfare measured by the GPI has generally exceeded GDP across all three countries in the study period, apart from 2023 in Estonia and Lithuania, offering indications that the welfare returns of additional economic growth might be diminishing. However, the extent to which the GPI exceeds or falls below GDP varies considerably depending on parameter choices. The sensitivity of the GPI to assumptions regarding hourly wages, carbon cost, and inequality baselines highlights methodological challenges that makes cross-country comparisons difficult. These findings caution against uncritical use of the GPI in policy settings and highlight the need for methodological standardisation and clearer valuation guidelines if the metric is to serve as a credible tool for assessing progress beyond GDP.
SN - 1470-160X
SN - 1872-7034
ER -