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Can NNP be used for welfare comparisons?

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This paper contains a critical assessment of the claim that nnp can be used for welfare comparisons. The analysis assumes that national accounts are comprehensive (in particular, “greened” by taking into account environmental amenities and natural resource depletion), but does not assume optimal resource allocation. The general conclusion is that greater nnp does not correspond to welfare enhancement, unless the net investment flows are revalued. Real utility-nnp, and real measurable nnp made comparable across time by means of a consumer price index, allow for such revaluation, and thus indicate welfare improvement.

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  • Asheim, Geir B., 2005. "Can NNP be used for welfare comparisons?," Memorandum 24/2005, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2005_024
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2005/Memo-24-2005.pdf
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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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    3. Geir B. Asheim & Wolfgang Buchholz, 2004. "A General Approach to Welfare Measurement through National Income Accounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 361-384, June.
    4. Asheim, Geir B. & Weitzman, Martin L., 2001. "Does NNP growth indicate welfare improvement?," Economics Letters, Elsevier, vol. 73(2), pages 233-239, November.
    5. Dasgupta, Partha & M Ler, Karl-G Ran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 69-93, February.
    6. 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.
    7. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    8. Martin L. Weitzman, 1970. "Aggregation and Disaggregation in the Pure Theory of Capital and Growth: A New Parable," Cowles Foundation Discussion Papers 292, Cowles Foundation for Research in Economics, Yale University.
    9. Asheim, Geir B., 2005. "Welfare comparisons between societies with different population sizes and environmental characteristics," Memorandum 25/2005, Oslo University, Department of Economics.
    10. Pezzey, John C V & Withagen, Cees A, 1998. " The Rise, Fall and Sustainability of Capital-Resource Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(2), pages 513-527, June.
    11. Dasgupta, Partha, 2001. "Valuing Objects and Evaluating Policies in Imperfect Economies," Economic Journal, Royal Economic Society, vol. 111(471), pages 1-29, May.
    12. Weitzman, Martin L, 2001. " A Contribution to the Theory of Welfare Accounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 1-23, March.
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    Cited by:

    1. Robert D. Cairns & Stellio Del Campo & Vincent Martinet, 2016. "Sustainability of an economy relying on two reproducible assets," Working Papers 2016/03, INRA, Economie Publique.
    2. Mota, Rui Pedro & Domingos, Tiago & Martins, Victor, 2008. "Analysis of green net national product and genuine saving in Portugal, 1991 - 2005," MPRA Paper 13347, University Library of Munich, Germany.
    3. Nick Hanley & Louis Dupuy & Eoin McLaughlin, 2015. "Genuine Savings And Sustainability," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 779-806, September.
    4. Geir Asheim & Taoyuan Wei, 2009. "Sectoral Income," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 65-87, January.
    5. Doyen, L. & Martinet, V., 2012. "Maximin, viability and sustainability," Journal of Economic Dynamics and Control, Elsevier, vol. 36(9), pages 1414-1430.
    6. Verchère, Alban, 2011. "Le développement durable en question : analyses économiques autour d’un improbable compromis entre acceptions optimiste et pessimiste du rapport de l’Homme à la Nature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(3), pages 337-403, septembre.
    7. Cairns, Robert D. & Martinet, Vincent, 2014. "An environmental-economic measure of sustainable development," European Economic Review, Elsevier, vol. 69(C), pages 4-17.
    8. Fabrizio Bulckaen & Marco Stampini, 2009. "On shadow prices for the measurement of sustainability," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 11(6), pages 1197-1213, December.
    9. Marc Fleurbaey & Guillaume Gaulier, 2009. "International Comparisons of Living Standards by Equivalent Incomes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 597-624, September.
    10. Partha Dasgupta, 2009. "The Welfare Economic Theory of Green National Accounts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 3-38, January.
    11. Mota, Rui Pedro & Domingos, Tiago & Martins, Victor, 2010. "Analysis of genuine saving and potential green net national income: Portugal, 1990-2005," Ecological Economics, Elsevier, vol. 69(10), pages 1934-1942, August.
    12. Heal, Geoffrey & Kristrom, Bengt, 2008. "A note on national income in a dynamic economy," Economics Letters, Elsevier, vol. 98(1), pages 2-8, January.
    13. Mota, Rui Pedro & Domingos, Tiago, 2013. "Assessment of the theory of comprehensive national accounting with data for Portugal," Ecological Economics, Elsevier, vol. 95(C), pages 188-196.

    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
    • D60 - Microeconomics - - Welfare Economics - - - General
    • 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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