| Summary: | The welfare of nations is an important area of consideration for governments, politicians, and policymakers. While Gross Domestic Product (GDP) has been used by most countries to assess economic welfare, many scientists, economists, and sociologists are questioning the validity of the tool. To manage economic welfare and well-being, a national monitoring system should consider a broad range of comprehensive indicators, where the dynamic interactions between actors, processes, and decisions with social, environmental, and economic factors are considered. This study reviews the limitations of GDP as a measurement of economic welfare and presents the Genuine Progress Indicator 2.0 (GPI 2.0) as a potential alternative. The indicator measures economic welfare based on the net psychic income approach. The GPI 2.0 was applied to Iceland to examine the feasibility of the methodology and explore changes in the economic welfare of the country between the period 2000-2016. Comparisons are made between GDP and GPI 2.0, and analysis of limitations and possible obstacles are provided. GPI 2.0 was found to be an imperfect tool, which requires considerable data sources for accurate measurements. However, the outcome of this study determined that the implementation of this indicator provides significant benefits in guiding modern society toward well-being and economic welfare. By providing information about utility and disutility related to final consumption of market and non-market goods and services, Iceland’s GPI can inform decision-makers on a wide range of impacts of their actions. Velferð þjóðar er mikilvægur þáttur fyrir stjórnvöld, stjórnamálamenn og stofnanir sem vinna að reglugerðum. Flest lönd í dag notast við mælingu á landsframleiðslu (e. Gross Domestic Product) til að meta efnahagslega velferð í landinu, en notkun landsframleiðslu hefur þó verið gagnrýnd sem mælikvarði á velferð. Til þess að mæla efnahagslega velferð og velsæld á landvísu þarf að notast við fjölbreyttra aðferðarfræði sem tekur tillit til allra ...
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