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Sustainability and well-being indicators

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  • Neumayer, Eric

Abstract

This paper provides a review and critical discussion of indicators, which attempt to combine the measurement of sustainability with that of well-being. It starts with some commonly agreed definitions of sustainability, showing how most well-being indicators tell us little if anything at all about this issue. Sustainability is most commonly defined in economics as non-declining utility or well-being over time. Yet, due to its future orientation, most indicators of sustainability such as Genuine Savings (GS) have merely focused on the capacity to provide utility in the future, but have not included the measurement of current well-being. Indicators of well-being such as the Human Development Index (HDI), on the other hand, have typically failed to account for sustainability in their measurement of current well-being. The paper then critically reviews the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI), which are the most prominent examples of an indicator, which attempts to fully integrate the measurement of welfare with that of sustainability into one single indicator. Such an integration, whilst seemingly attractive, is rendered difficult by the fact that what contributes to current well-being need not contribute at all or in the same way to sustainability and vice versa. We also review various proposals of extending a welfare indicator, namely the HDI, with sustainability considerations without full integration of both concepts. All of these proposals suffer from a range of fundamental conceptual problems. As one possible alternative, we propose a combination of the HDI and GS, which holds great promise for an assessment of wellbeing and its sustainability, particularly in developing countries.

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Bibliographic Info

Paper provided by London School of Economics and Political Science in its series Open Access publications from London School of Economics and Political Science with number 2004/23.

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Date of creation: Mar 2004
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Handle: RePEc:ner:lselon:http://eprints.lse.ac.uk/30851/

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  1. Anand, Sudhir & Sen, Amartya, 2000. "Human Development and Economic Sustainability," World Development, Elsevier, vol. 28(12), pages 2029-2049, December.
  2. Kenneth J. Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "The genuine savings criterion and the value of population," Economic Theory, Springer, vol. 21(2), pages 217-225, 03.
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  4. William D. Nordhaus & James Tobin, 1972. "Is Growth Obsolete?," NBER Chapters, in: Economic Research: Retrospect and Prospect Vol 5: Economic Growth, pages 1-80 National Bureau of Economic Research, Inc.
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  12. Smith, Douglas, 2001. "International evidence on how income inequality and credit market imperfections affect private saving rates," Journal of Development Economics, Elsevier, vol. 64(1), pages 103-127, February.
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  16. Neumayer, Eric, 2000. "On the methodology of ISEW, GPI and related measures: some constructive suggestions and some doubt on the 'threshold' hypothesis," Ecological Economics, Elsevier, vol. 34(3), pages 347-361, September.
  17. Schmidt-Hebbel, Klaus & Serven, Luis, 2000. "Does income inequality raise aggregate saving?," Journal of Development Economics, Elsevier, vol. 61(2), pages 417-446, April.
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  24. Castaneda, Beatriz E., 1999. "An index of sustainable economic welfare (ISEW) for Chile," Ecological Economics, Elsevier, vol. 28(2), pages 231-244, February.
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Cited by:
  1. Arman, Michael & Zuo, Jian & Wilson, Lou & Zillante, George & Pullen, Stephen, 2009. "Challenges of responding to sustainability with implications for affordable housing," Ecological Economics, Elsevier, vol. 68(12), pages 3034-3041, October.
  2. Shmelev, Stanislav E., 2011. "Dynamic sustainability assessment: The case of Russia in the period of transition (1985-2008)," Ecological Economics, Elsevier, vol. 70(11), pages 2039-2049, September.
  3. Pineda, Jose, 2012. "Sustainability and human development: a proposal for a sustainability adjusted HDI (SHDI)," MPRA Paper 39656, University Library of Munich, Germany.
  4. Ollivier, TO, 2009. "The usefulness of aggregate sustainability indicators for policy making: What do they say for Madagascar?," MPRA Paper 16607, University Library of Munich, Germany.
  5. Dietz, Simon & Neumayer, Eric, 2007. "Weak and strong sustainability in the SEEA: Concepts and measurement," Ecological Economics, Elsevier, vol. 61(4), pages 617-626, March.
  6. Rahman, Tauhidur & Mittelhammer, Ron C. & Wandschneider, Philip, 2005. "Measuring the Quality of Life across Countries: A Sensitivity Analysis of Well-being Indices," Working Papers RP2005/06, World Institute for Development Economic Research (UNU-WIDER).

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