Measuring sustainable welfare: A new approach to the ISEW
Sustainability and welfare assessment is a contemporary theme of major scientific and policy relevance, requiring the consideration of multiple dimensions and diverse perspectives. The economic approach to sustainability and welfare assessment has frequently relied on alternatives, or adjustments, to GDP, widely used as an indicator of macroeconomic performance. Several authors have proposed alternative indicators, such as the ISEW, which intend to measure sustainability and economic welfare in a way that avoids the limitations of GDP; namely accounting for the value of externalities, the distribution of income and natural resources depletion. Since Daly and Cobb (1989) there have been proposed improvements to the ISEW, however, its aptitude to represent a sound alternative to GDP is still the subject of scientific debate. This paper presents a new approach to the ISEW (named Modified ISEW), including new components and methodological changes for the estimation of the index. These have the purpose of avoiding some of the index shortcomings and allow for a direct comparison with the GDP, which are advantages over previous studies. An application is developed for the US case, taking advantage of wide data availability and the possibility of comparing the results with previous works. The results obtained provide a clearer picture of the success or failure of environmental and social policies, namely by avoiding the tampering effect resulting from the cumulative accounting of environmental externalities. This work also emphasizes the inadequacy of GDP as a welfare indicator, as well as the need to develop and adopt alternative indicators.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Costanza, Robert & Erickson, Jon & Fligger, Karen & Adams, Alan & Adams, Christian & Altschuler, Ben & Balter, Stephanie & Fisher, Brendan & Hike, Jessica & Kelly, Joe, 2004. "Estimates of the Genuine Progress Indicator (GPI) for Vermont, Chittenden County and Burlington, from 1950 to 2000," Ecological Economics, Elsevier, vol. 51(1-2), pages 139-155, November.
- Hamilton, Clive, 1999. "The genuine progress indicator methodological developments and results from Australia," Ecological Economics, Elsevier, vol. 30(1), pages 13-28, July.
- 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.
- Costanza, Robert & Farber, Stephen C. & Maxwell, Judith, 1989. "Valuation and management of wetland ecosystems," Ecological Economics, Elsevier, vol. 1(4), pages 335-361, December.
- Gowdy, John, 2005. "Toward a new welfare economics for sustainability," Ecological Economics, Elsevier, vol. 53(2), pages 211-222, April.
- 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.
- Ayres, Robert U., 1996. "Limits to the growth paradigm," Ecological Economics, Elsevier, vol. 19(2), pages 117-134, November.
- Richard S. J. Tol, 2010.
"The Economic Impact of Climate Change,"
Perspektiven der Wirtschaftspolitik,
Verein für Socialpolitik, vol. 11(s1), pages 13-37, 05.
- Tol, Richard S. J., 2008. "The Economic Impact of Climate Change," Papers WP255, Economic and Social Research Institute (ESRI).
- J. Steven Landefeld & Barbara M. Fraumeni & Cindy M. Vojtech, 2005. "Accounting for Nonmarket Production: A Prototype Satellite Account Using the American Time Use Survey," BEA Papers 0056, Bureau of Economic Analysis.
- Max-Neef, Manfred, 1995. "Economic growth and quality of life: a threshold hypothesis," Ecological Economics, Elsevier, vol. 15(2), pages 115-118, November.
- Stockhammer, Engelbert & Hochreiter, Harald & Obermayr, Bernhard & Steiner, Klaus, 1997. "The index of sustainable economic welfare (ISEW) as an alternative to GDP in measuring economic welfare. The results of the Austrian (revised) ISEW calculation 1955-1992," Ecological Economics, Elsevier, vol. 21(1), pages 19-34, April.
- Farber, Stephen C. & Costanza, Robert & Wilson, Matthew A., 2002. "Economic and ecological concepts for valuing ecosystem services," Ecological Economics, Elsevier, vol. 41(3), pages 375-392, June.
- 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.
- Ayres, Robert U., 2004. "On the life cycle metaphor: where ecology and economics diverge," Ecological Economics, Elsevier, vol. 48(4), pages 425-438, April.
- Eric Neumayer, 1999. "The ISEW -- not an Index of Sustainable Economic Welfare," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 48(1), pages 77-101, September.
- 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.
- Eisner, Robert, 1988. "Extended Accounts for National Income and Product," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1611-1684, December.
- Howarth, Richard B. & Farber, Stephen, 2002. "Accounting for the value of ecosystem services," Ecological Economics, Elsevier, vol. 41(3), pages 421-429, June.
- Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
- Pimentel, David & Zuniga, Rodolfo & Morrison, Doug, 2005. "Update on the environmental and economic costs associated with alien-invasive species in the United States," Ecological Economics, Elsevier, vol. 52(3), pages 273-288, February.
- England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, vol. 25(1), pages 89-103, April.
- David G. Schramm, 2006. "Individual and Social Costs of Divorce in Utah," Journal of Family and Economic Issues, Springer, vol. 27(1), pages 133-151, April.
- 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.
- Ekins, Paul & Simon, Sandrine & Deutsch, Lisa & Folke, Carl & De Groot, Rudolf, 2003. "A framework for the practical application of the concepts of critical natural capital and strong sustainability," Ecological Economics, Elsevier, vol. 44(2-3), pages 165-185, March.
- William D. Nordhaus, 1995. "How Should We Measure Sustainable Income?," Cowles Foundation Discussion Papers 1101, Cowles Foundation for Research in Economics, Yale University.
- Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 1-27, January.
- Clarke, Matthew & Islam, Sardar M.N., 2005. "Diminishing and negative welfare returns of economic growth: an index of sustainable economic welfare (ISEW) for Thailand," Ecological Economics, Elsevier, vol. 54(1), pages 81-93, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:69:y:2010:i:4:p:810-819. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.