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The Linearized Hamiltonian as Comprehensive NDP

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  • Martin L. Weitzman

Abstract

For guidance in determining which items should be included in comprehensive NDP and how they should be included, reference is often made to the linearized Hamiltonian from an optimal growth problem. This note shows how the heuristic linearized-Hamiltonian argument can be given a rigorous welfare justification in terms of a money-metric utility function that is "naturally normalized" to be conformable with consumption at the time, of measurement. The implied normalization is of the same type as is required to interpret the "area under the demand curve" as a constant-dollar-denominated true measure of consumer's surplus. The concept of the "sustainability-equivalence principle" is explained, and is indicated why this principle is of basic importance for the theory of national income accounting.

Suggested Citation

  • Martin L. Weitzman, 1998. "The Linearized Hamiltonian as Comprehensive NDP," Harvard Institute of Economic Research Working Papers 1845, Harvard - Institute of Economic Research.
  • Handle: RePEc:fth:harver:1845
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    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
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    Cited by:

    1. Aronsson, Thomas & Lofgren, Karl-Gustaf, 1999. "Pollution tax design and 'Green' national accounting," European Economic Review, Elsevier, vol. 43(8), pages 1457-1474, August.
    2. Azqueta, Diego & Sotelsek, Daniel, 2007. "Valuing nature: From environmental impacts to natural capital," Ecological Economics, Elsevier, vol. 63(1), pages 22-30, June.
    3. Tsur, Yacov & Zemel, Amos, 2006. "Welfare measurement under threats of environmental catastrophes," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 421-429, July.
    4. Huhtala, Anni & Samakovlis, Eva, 2003. "Green Accounting, Air Pollution and Health," Working Papers 82, National Institute of Economic Research.
    5. Bostedt, Göran & Lundgren, Tommy, 2010. "Accounting for cultural heritage -- A theoretical and empirical exploration with focus on Swedish reindeer husbandry," Ecological Economics, Elsevier, vol. 69(3), pages 651-657, January.
    6. Hediger, Werner, 2010. "Welfare and capital-theoretic foundations of corporate social responsibility and corporate sustainability," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 518-526, August.
    7. Ottmar Edenhofer & Susanne Kadner & Christoph von Stechow & Gregor Schwerhoff & Gunnar Luderer, 2014. "Linking climate change mitigation research to sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 30, pages 476-499 Edward Elgar Publishing.
    8. Figueroa B., Eugenio & Orihuela R., Carlos & Calfucura T., Enrique, 2010. "Green accounting and sustainability of the Peruvian metal mining sector," Resources Policy, Elsevier, vol. 35(3), pages 156-167, September.
    9. Hassan, Rashid & Ngwenya, Phindile, 2006. "Valuing forest services missing from the national accounts: The contribution of cultivated forests to wealth accumulation in Swaziland," Forest Policy and Economics, Elsevier, vol. 9(3), pages 249-260, December.
    10. Partha Dasgupta & Karl-Göran Mäler, 2003. "The Economics of Non-Convex Ecosystems: Introduction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 499-525.
    11. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hi4j70a29 is not listed on IDEAS
    12. Céline Antonin & Thomas Melonio & Xavier Timbeau, 2012. "L'epargne nette ré-ajustée," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 259-286.
    13. Huhtala, Anni & Toppinen, Anne & Boman, Mattias, 2001. "An Environmental Accountant`s Dilemma: Are Stumpage Prices Reliable Indicators of Resource Scarcity?," Working Papers 77, National Institute of Economic Research.
    14. Partha Dasgupta & Karl-Goran Maler, 1998. "Decentralization Schemes, Cost-Benefit-Analysis, and Net National Product as a Measure of Social Well-Being," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 12, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    15. Yacov Tsur & Amos Zemel, 2008. "Regulating environmental threats," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 297-310.
    16. Tsur, Yacov & Zemel, Amos, 2006. "Regulating Environmental Threats," Discussion Papers 7150, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.

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