Beyond GDP: Measuring Welfare and Assessing Sustainability by Marc Fleurbaey

By Marc Fleurbaey

Even with recurrent feedback and a powerful creation of other signs through students and NGOs, GDP continues to be the vital indicator of nations' good fortune. This e-book revisits the principles of symptoms of social welfare, and seriously examines the 4 major possible choices to GDP which have been proposed: composite symptoms, subjective healthiness indexes, features (the underlying philosophy of the Human improvement Index), and identical earning.
Its provocative thesis is that the matter with GDP isn't that it makes use of a financial metric yet that it makes a speciality of a slender set of features of person lives. it really is really attainable to construct an alternate, extra accomplished, financial indicator that takes source of revenue as its first benchmark and provides or subtracts corrections that symbolize the ease or expense of non-market features of person lives. this sort of degree can recognize the values and personal tastes of the folks and provides as a lot weight as they do to the non-market dimensions.
a different provocative suggestion is that, by contrast, lots of the at present to be had replacement signs, together with subjective wellbeing and fitness indexes, aren't as respectful of people's values simply because, like GDP, they're too slender and provides particular weights to a number of the dimensions of lifestyles in a extra uniform means, with out taking account of the variety of perspectives on existence within the inhabitants. the preferred allure that such substitute signs derive from being non-monetary is as a result in keeping with equivocation.
in addition, it really is argued during this ebook that "greening" GDP and relative signs isn't the right approach to include sustainability matters. Sustainability consists of predicting attainable destiny paths, for this reason assorted signs than these assessing the present scenario. whereas a number of signs were renowned (adjusted web discount rates, ecological footprint), none of them comprises the mandatory forecasting attempt right review of attainable futures calls for.

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Over the period considered, the growth rate for the SMEW was about two-thirds of total GNP growth. Nordhaus and Tobin’s conclusion was that, despite its limits, GNP growth remained a not-so-inadequate guide for policy. But they remained cautious to present their work as being no more than a point of departure. Some further initiatives took place during the 1980s, such as the Economic Aspect of Welfare index (EAW) proposed by Zolotas (1981). The issue was then reopened in the late 1980s by Cobb and Daly (1989), who proposed the index of sustainable welfare (ISEW), further refined by Cobb and Cobb (1994).

As mentioned above, the possibility of testing different weighting factors has been already proposed by Osberg and Sharpe (2002). Modern communication tools allow doing this in a much more systematic way, with clients of statistical websites being able to perform their own online aggregations and vizualise their results in various forms. 1. 1. 1. 1. (continued) Theme Subtheme Information and communication Core indicator Internet users per 100 population technologies Other indicator Fixed telephone lines per 100 population Mobile cellular telephone subscribers per 100 population Research and development Gross domestic expenditure on R&D as a percentage of GDP Global economic Tourism Tourism contribution to GDP Trade Current account deficit as percentage of GDP partnership Share of imports from developing countries and from LDCs Average tariff barriers imposed on exports from developing countries and LDCs External financing Net Official Development Assistance (ODA) given or received as a percentage of GNI Foreign direct investment (FDI) net inflows and net outflows as percentage of GDP Remittances as percentage of GNI Consumption and production Material consumption Material intensity of the economy Domestic material consumption Energy use Annual energy consumption, total and by main user Share of renewable energy sources in total patterns category energy use Intensity of energy use, total and by economic activity Waste generation and management Transportation Generation of hazardous waste Generation of waste Waste treatment and disposal Management of radioactive waste Modal split of passenger transportation Modal split of freight transport Energy intensity of transport 1 .

This has led some authors to argue in favor of a so-called threshold hypothesis according to which GDP growth contributes to welfare only up to a certain level, beyond which GDP and welfare move in opposite directions (Max-Neef 1995). Another couple of much more recent papers can also be related to the Nordhaus-Tobin tradition. Fleurbaey and Gaulier (2009)7 and Jones and Klenow (2010) develop monetary approaches based on the notion of “equivalent income,” the theoretical justification of which will be discussed at length in chapter 4.

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