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A General Approach to Welfare Measurement through National Income Accounting

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Abstract

We develop a framework for analyzing national income accounting using a revealed welfare approach that is sufficiently general to cover, e.g., both the standard discounted utilitarian and maximin criteria as special cases. We show that the basic welfare properties of comprehensive national income accounting, which were previously ascribed only to the discounted utilitarian case, in fact extend to this more general framework. In particular, it holds under a wide range of circumstances that real nnp growth (or equivalently, a positive value of net investments) indicates welfare improvement. We illustrate the applicability of our approach by considering resource allocation mechanisms in the Dasgupta-Heal-Solow model of capital accumulation and resource depletion.

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  • Asheim, Geir & Buchholz, Wolfgang, 2003. "A General Approach to Welfare Measurement through National Income Accounting," Memorandum 32/2002, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2002_032
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    1. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 551-556.
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    5. Asheim, Geir B. & Buchholz, Wolfgang & Tungodden, Bertil, 2001. "Justifying Sustainability," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 252-268, May.
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    9. Cairns, Robert D., 2000. "Sustainability accounting and green accounting," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 49-54, February.
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    12. Asheim, Geir B. & Weitzman, Martin L., 2001. "Does NNP growth indicate welfare improvement?," Economics Letters, Elsevier, vol. 73(2), pages 233-239, November.
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    Cited by:

    1. Cairns, Robert D., 2008. "Value and income," Ecological Economics, Elsevier, vol. 66(2-3), pages 417-424, June.
    2. 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.
    3. Thomas Aronsson & Karl-Gustaf Löfgren (ed.), 2010. "Handbook of Environmental Accounting," Books, Edward Elgar Publishing, number 12796.
    4. Geir B. Asheim, 2003. "Green national accounting for welfare and sustainability:A Taxonomy Of Assumptions And Results," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 113-130, May.
    5. Karp, Larry S. & Tsur, Yacov, 2007. "Climate Policy When The Distant Future Matters: Catastrophic Events With Hyperbolic Discounting," Discussion Papers 7181, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    6. Alvarez-Cuadrado, Francisco & Van Long, Ngo, 2009. "A mixed Bentham-Rawls criterion for intergenerational equity: Theory and implications," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 154-168, September.
    7. Geir Asheim, 2004. "Green national accounting with a changing population," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 601-619, March.
    8. repec:eee:mateco:v:70:y:2017:i:c:p:51-65 is not listed on IDEAS
    9. Asheim, Geir B. & Buchholz, Wolfgang & Hartwick, John M. & Mitra, Tapan & Withagen, Cees, 2007. "Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 213-229, March.
    10. Asheim, Geir B., 2007. "Can NNP be used for welfare comparisons?," Environment and Development Economics, Cambridge University Press, vol. 12(01), pages 11-31, February.
    11. Mohajan, Haradhan, 2010. "Green net national product for the sustainability and social welfare," MPRA Paper 50840, University Library of Munich, Germany, revised 18 Feb 2011.
    12. Olfa JABALLI & Sebnem SAHIN, "undated". "Green Accounting and Climate Change Problem: A New Evidence from the Turkish Economy," EcoMod2004 330600071, EcoMod.
    13. Kirk Hamilton & Giovanni Ruta, 2009. "Wealth Accounting, Exhaustible Resources and Social Welfare," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 53-64, January.
    14. Olfa Jaballi & Sebnem Sahin, 2005. "Towards sustainable lignite consumption in Turkey and a welfare analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00194716, HAL.
    15. Fleurbaey, Marc, 2015. "On sustainability and social welfare," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 34-53.
    16. Haradhan Kumar Mohajan, 2011. "The Real Net National Product in Sustainable Development," KASBIT Business Journals, Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 4, pages 89-103, December.
    17. Kirk Hamilton & Giovanni Ruta & Liaila Tajibaeva, 2006. "Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 517-533, August.

    More about this item

    Keywords

    National income accounting; dynamic welfare;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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