A critique of the perceived solid conceptual foundations of ISEW & GPI — Irving Fisher's cognisance of human-health capital in ‘net psychic income’
AbstractThis paper puts forward a political economy critique of the perceived solid conceptual foundations of Sustainable Well-Being Indicators (SWBIs) such as ISEW and GPI. A particular version of ‘entropic net psychic income’ has been implanted as the main conceptual basis for these aggregated measures of sustainable economic welfare. However, a well-known limitation of SWBIs is that they do not prudently factor-in measures of investment and depreciation of ‘human-health capital’—yet this is a critical aspect of sustainable well-being. It is argued that under Fisher's psychic income framework, the heart of the indicator is a theory that specifies accounting for some sort of change in the human psyche, i.e. the stock (or fund) of human-health capital. Advocates of SWBIs cannot adequately account for the degree of human health or knowledge, because this is not their reference point—‘personal consumption expenditures’ is their reference point. Political economy seeks to avoid abstracting from the whole reality, recognising that endogenous processes of human-health capital formation are overdetermined. This paper thus argues that there is a significant conceptual shortcoming in ISEW and GPI, which, if left unattended will undermine the measure of theoretical legitimacy and empirical efficacy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 88 (2013)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolecon
ISEW; GPI; Net psychic income; Human-health capital; Political economy;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stefan Mann, 2008.
"Framing Obesity in Economic Theory and Policy,"
Review of Social Economy,
Taylor & Francis Journals, vol. 66(2), pages 163-179.
- Mann, Stefan, 2006. "Framing Obesity in Economic Theory and Policy," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25619, International Association of Agricultural Economists.
- Geoffrey M. Hodgson, 2003. "The hidden persuaders: institutions and individuals in economic theory," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 159-175, March.
- Beça, Pedro & Santos, Rui, 2010. "Measuring sustainable welfare: A new approach to the ISEW," Ecological Economics, Elsevier, vol. 69(4), pages 810-819, February.
- Neumayer, Eric, 2004.
"Sustainability and Well-being Indicators,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Bleys, Brent, 2008. "Proposed changes to the Index of Sustainable Economic Welfare: An application to Belgium," Ecological Economics, Elsevier, vol. 64(4), pages 741-751, February.
- Brian Chi-ang Lin, 2007. "A New Vision Of The Knowledge Economy," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 553-584, 07.
- Eric Neumayer, 1999.
"The ISEW: not an index of sustainable economic welfare,"
LSE Research Online Documents on Economics
30769, London School of Economics and Political Science, LSE Library.
- Eric Neumayer, 1999. "The ISEW -- not an Index of Sustainable Economic Welfare," Social Indicators Research, Springer, vol. 48(1), pages 77-101, September.
- Lawn, Philip A., 2003. "A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and other related indexes," Ecological Economics, Elsevier, vol. 44(1), pages 105-118, February.
- Brennan, Andrew John, 2008. "Theoretical foundations of sustainable economic welfare indicators -- ISEW and political economy of the disembedded system," Ecological Economics, Elsevier, vol. 67(1), pages 1-19, August.
- Nicholas Crafts, 2002. "UK Real National Income, 1950-1998: Some Grounds for Optimism," National Institute Economic Review, National Institute of Economic and Social Research, vol. 181(1), pages 87-95, July.
- Dietz, Simon & Neumayer, Eric, 2007.
"Weak and strong sustainability in the SEEA: Concepts and measurement,"
Elsevier, vol. 61(4), pages 617-626, March.
- Simon Dietz & Eric Neumayer, 2007. "Weak and strong sustainability in the SEEA: concepts and measurement," LSE Research Online Documents on Economics 3058, London School of Economics and Political Science, LSE Library.
- James Tobin, 2005. "Irving Fisher (1867-1947)," American Journal of Economics and Sociology, Wiley Blackwell, vol. 64(1), pages 19-42, 01.
- Posner, Stephen M. & Costanza, Robert, 2011. "A summary of ISEW and GPI studies at multiple scales and new estimates for Baltimore City, Baltimore County, and the State of Maryland," Ecological Economics, Elsevier, vol. 70(11), pages 1972-1980, September.
- Philip Lawn, 2005. "An Assessment of the Valuation Methods Used to Calculate the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Sustainable Net Benefit Index (SNBI)," Environment, Development and Sustainability, Springer, vol. 7(2), pages 185-208, 06.
- James Tobin, 2005. ""Fisher's" Nature of Capital and Income," American Journal of Economics and Sociology, Wiley Blackwell, vol. 64(1), pages 207-214, 01.
- Lawn, Philip A. & Sanders, Richard D., 1999. "Has Australia surpassed its optimal macroeconomic scale? Finding out with the aid of 'benefit' and 'cost' accounts and a sustainable net benefit index," Ecological Economics, Elsevier, vol. 28(2), pages 213-229, February.
- Lin, Brian Chi-ang, 2006. "A sustainable perspective on the knowledge economy: A critique of Austrian and mainstream views," Ecological Economics, Elsevier, vol. 60(1), pages 324-332, November.
- Lawn, Philip, 2006. "Using the Fisherian concept of income to guide a nation's transition to a steady-state economy," Ecological Economics, Elsevier, vol. 56(3), pages 440-453, March.
- Bowles, Samuel & Gintis, Herbert, 1975. "The Problem with Human Capital Theory-A Marxian Critique," American Economic Review, American Economic Association, vol. 65(2), pages 74-82, May.
- Twomey, Paul, 1998. "Reviving Veblenian Economic Psychology," Cambridge Journal of Economics, Oxford University Press, vol. 22(4), pages 433-48, July.
- Paul Downward & John H. Finch & John Ramsay, 2002. "Critical realism, empirical methods and inference: a critical discussion," Cambridge Journal of Economics, Oxford University Press, vol. 26(4), pages 481-500, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.