IDEAS home Printed from https://ideas.repec.org/p/rug/rugwps/21-1027.html
   My bibliography  Save this paper

Towards ISEW and GPI 2.0, part II: Is Europe faring well with growth? Evidence from a welfare comparison in the EU-15 from 1995 to 2018

Author

Listed:
  • Jonas Van der Slycken
  • Brent Bleys

Abstract

This paper is the first to calculate economic welfare for the EU-15 countries in a standardized and comparable way. This paper does so by building on a case study for Belgium by Van der Slycken and Bleys (2021) that puts forward a “2.0 methodology” and two distinct welfare measures that deal with cross-time and cross-boundary issues. Both welfare and GDP per capita improved in the EU-15 between 1995 and 2018. Yet, there is an important divergence between welfare and GDP: over time experiential welfare per capita and the per capita benefits and costs of present activities improved by respectively 10.5% and 14%, while GDP per capita grew by 32.4%. These trends in per capita welfare are mainly driven by individual consumption growth, the shadow economy and the welfare losses from income inequality, which compensated about half of the welfare gains of the former two categories. The gap between welfare and GDP diverges especially after the financial crisis when welfare starts stagnating. At the end of the studied period, the EU-15 had already recovered from the financial crisis from a GDP perspective, but it has not from a welfare view. Since the welfare levels in 2018 are less than 2% lower than the period-maximum, there is no conclusive evidence in favor of the threshold hypothesis at the level of the EU-15. The fact the welfare level in nine individual countries is more than 5% lower than its the peak value, however, signals a clear threshold for these countries. Yet, welfare levels could be increased beyond previous peak levels with effective social and environmental welfare policies in place that focus on redistributing and respecting environmental boundaries our economies instead of promoting economic growth.

Suggested Citation

  • Jonas Van der Slycken & Brent Bleys, 2021. "Towards ISEW and GPI 2.0, part II: Is Europe faring well with growth? Evidence from a welfare comparison in the EU-15 from 1995 to 2018," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 21/1027, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:21/1027
    as

    Download full text from publisher

    File URL: http://wps-feb.ugent.be/Papers/wp_21_1027.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Simon Kuznets, 1934. "National Income, 1929-1932," NBER Books, National Bureau of Economic Research, Inc, number kuzn34-1, June.
    2. William D. Nordhaus & James Tobin, 1973. "Is Growth Obsolete?," NBER Chapters, in: The Measurement of Economic and Social Performance, pages 509-564, National Bureau of Economic Research, Inc.
    3. Nicholas A. Ashford & Ralph P. Hall & Johan Arango-Quiroga & Kyriakos A. Metaxas & Amy L. Showalter, 2020. "Addressing Inequality: The First Step Beyond COVID-19 and Towards Sustainability," Sustainability, MDPI, vol. 12(13), pages 1-43, July.
    4. Brent Bleys, 2012. "Beyond GDP: Classifying Alternative Measures for Progress," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(3), pages 355-376, December.
    5. Büscher, Bram & Feola, Giuseppe & Fischer, Andrew & Fletcher, Robert & Gerber, Julien-François & Harcourt, Wendy & Koster, Martijn & Schneider, Mindi & Scholtens, Joeri & Spierenburg, Marja & Walstra,, 2021. "Planning for a world beyond COVID-19: Five pillars for post-neoliberal development," World Development, Elsevier, vol. 140(C).
    6. Fox, Mairi-Jane V. & Erickson, Jon D., 2018. "Genuine Economic Progress in the United States: A Fifty State Study and Comparative Assessment," Ecological Economics, Elsevier, vol. 147(C), pages 29-35.
    7. Menegaki, Angeliki N. & Marques, António Cardoso & Fuinhas, José Alberto, 2017. "Redefining the energy-growth nexus with an index for sustainable economic welfare in Europe," Energy, Elsevier, vol. 141(C), pages 1254-1268.
    8. Hoekstra,Rutger, 2019. "Replacing GDP by 2030," Cambridge Books, Cambridge University Press, number 9781108739870.
    9. M. Fleurbaey., 2012. "Beyond GDP: The Quest for a Measure of Social Welfare," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    10. Van der Slycken, Jonas & Bleys, Brent, 2020. "A Conceptual Exploration and Critical Inquiry into the Theoretical Foundation(s) of Economic Welfare Measures," Ecological Economics, Elsevier, vol. 176(C).
    11. Joseph Stiglitz & Jean-Paul Fitoussi & Martine Durand, 2018. "Beyond GDP: Measuring What Counts for Economic and Social Performance," Sciences Po publications info:hdl:2441/4vsqk7docb9, Sciences Po.
    12. O'Mahony, Tadhg & Escardó-Serra, Paula & Dufour, Javier, 2018. "Revisiting ISEW Valuation Approaches: The Case of Spain Including the Costs of Energy Depletion and of Climate Change," Ecological Economics, Elsevier, vol. 144(C), pages 292-303.
    13. Angeliki Menegaki, 2018. "The Basic, the Solid, the Site-Specific and the Full or Total Index of Sustainable Economic Welfare (ISEW) for Turkey," Economies, MDPI, vol. 6(2), pages 1-18, April.
    14. 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.
    15. Dasgupta, Partha & Mã„Ler, Karl-Gã–Ran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 69-93, February.
    16. Nourry, Myriam, 2008. "Measuring sustainable development: Some empirical evidence for France from eight alternative indicators," Ecological Economics, Elsevier, vol. 67(3), pages 441-456, October.
    17. Giuseppe Munda, 2016. "Beyond welfare economics: some methodological issues," Journal of Economic Methodology, Taylor & Francis Journals, vol. 23(2), pages 185-202, June.
    18. Mastini, Riccardo & Kallis, Giorgos & Hickel, Jason, 2021. "A Green New Deal without growth?," Ecological Economics, Elsevier, vol. 179(C).
    19. Armiento, Mirko, 2018. "The Sustainable Welfare Index: Towards a Threshold Effect for Italy," Ecological Economics, Elsevier, vol. 152(C), pages 296-309.
    20. Daniel Francisco Pais & Tiago Lopes Afonso & António Cardoso Marques & José A Fuinhas, 2019. "Are Economic Growth and Sustainable Development Converging? Evidence from the Comparable Genuine Progress Indicator for Organisation for Economic Co-operation and Development Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 202-213.
    21. 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.
    22. Bleys, Brent & Whitby, Alistair, 2015. "Barriers and opportunities for alternative measures of economic welfare," Ecological Economics, Elsevier, vol. 117(C), pages 162-172.
    23. Held, Benjamin & Rodenhäuser, Dorothee & Diefenbacher, Hans & Zieschank, Roland, 2018. "The National and Regional Welfare Index (NWI/RWI): Redefining Progress in Germany," Ecological Economics, Elsevier, vol. 145(C), pages 391-400.
    24. 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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonas Van der Slycken & Brent Bleys, 2021. "Towards ISEW and GPI 2.0, part I: developing two alternative measures of economic welfare with distinct time and boundary perspectives for Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 21/1026, Ghent University, Faculty of Economics and Business Administration.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonas Van der Slycken & Brent Bleys, 2021. "Towards ISEW and GPI 2.0, part I: developing two alternative measures of economic welfare with distinct time and boundary perspectives for Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 21/1026, Ghent University, Faculty of Economics and Business Administration.
    2. Van der Slycken, Jonas & Bleys, Brent, 2020. "A Conceptual Exploration and Critical Inquiry into the Theoretical Foundation(s) of Economic Welfare Measures," Ecological Economics, Elsevier, vol. 176(C).
    3. Daniel Francisco Pais & Tiago Lopes Afonso & António Cardoso Marques & José A Fuinhas, 2019. "Are Economic Growth and Sustainable Development Converging? Evidence from the Comparable Genuine Progress Indicator for Organisation for Economic Co-operation and Development Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 202-213.
    4. Bleys, Brent & Whitby, Alistair, 2015. "Barriers and opportunities for alternative measures of economic welfare," Ecological Economics, Elsevier, vol. 117(C), pages 162-172.
    5. Long, Xianling & Ji, Xi, 2019. "Economic Growth Quality, Environmental Sustainability, and Social Welfare in China - Provincial Assessment Based on Genuine Progress Indicator (GPI)," Ecological Economics, Elsevier, vol. 159(C), pages 157-176.
    6. Jonas Van der Slycken & Brent Bleys, 2020. "Cost-shifting Versus “Full” Accountability: Dealing with Cross-time and Cross-boundary Issues in the ISEW and GPI. An application to Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 20/1003, Ghent University, Faculty of Economics and Business Administration.
    7. Kalimeris, Panos & Bithas, Kostas & Richardson, Clive & Nijkamp, Peter, 2020. "Hidden linkages between resources and economy: A “Beyond-GDP” approach using alternative welfare indicators," Ecological Economics, Elsevier, vol. 169(C).
    8. Günseli BERIK, 2020. "Measuring what matters and guiding policy: An evaluation of the Genuine Progress Indicator," International Labour Review, International Labour Organization, vol. 159(1), pages 71-94, March.
    9. Luhua Wu & Shijie Wang & Xiaoyong Bai & Guangjie Luo & Jinfeng Wang & Fei Chen & Chaojun Li & Chen Ran & Sirui Zhang, 2022. "Accelerating the Improvement of Human Well-Being in China through Economic Growth and Policy Adjustment," IJERPH, MDPI, vol. 19(19), pages 1-20, October.
    10. Theodore P. Lianos & Anastasia Pseiridis, 2021. "Adjusting GDP for ecological deficit: the Index of Debt to the Future (IDF)," SN Business & Economics, Springer, vol. 1(3), pages 1-22, March.
    11. Mirko Armiento, 2016. "The Sustainable Welfare Index for Italy, 1960-2013," Working Papers 1601, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2016.
    12. Posner, Stephen M. & Costanza, Robert, 2011. "A summary of ISEW and GPI studies at multiple scales and new estimates for Baltimore City, Baltimore County, and the State of Maryland," Ecological Economics, Elsevier, vol. 70(11), pages 1972-1980, September.
    13. Rugani, Benedetto & Marvuglia, Antonino & Pulselli, Federico Maria, 2018. "Predicting Sustainable Economic Welfare – Analysis and perspectives for Luxembourg based on energy policy scenarios," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 288-303.
    14. Menegaki, Angeliki N. & Tugcu, Can Tansel, 2017. "Energy consumption and Sustainable Economic Welfare in G7 countries; A comparison with the conventional nexus," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 892-901.
    15. Lawn, Philip & Clarke, Matthew, 2010. "The end of economic growth? A contracting threshold hypothesis," Ecological Economics, Elsevier, vol. 69(11), pages 2213-2223, September.
    16. O'Mahony, Tadhg & Escardó-Serra, Paula & Dufour, Javier, 2018. "Revisiting ISEW Valuation Approaches: The Case of Spain Including the Costs of Energy Depletion and of Climate Change," Ecological Economics, Elsevier, vol. 144(C), pages 292-303.
    17. Angeliki N. Menegaki, 2021. "Towards a Global Energy-Sustainable Economy Nexus; Summing up Evidence from Recent Empirical Work," Energies, MDPI, vol. 14(16), pages 1-16, August.
    18. Cook, David & Davíðsdóttir, Brynhildur, 2021. "An appraisal of interlinkages between macro-economic indicators of economic well-being and the sustainable development goals," Ecological Economics, Elsevier, vol. 184(C).
    19. Xincheng Zhu & Yulin Liu & Xin Fang, 2022. "Revisiting the Sustainable Economic Welfare Growth in China: Provincial Assessment Based on the ISEW," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(1), pages 279-306, July.
    20. Arzu TEKTAS & Asli Deniz HELVACIOGLU & Abdulmecit KARATAS, 2016. "The Potential Impact Of Regional Beyond Gdp Indicators On Elections," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 65-72, June.

    More about this item

    Keywords

    Index of Sustainable Economic Welfare (ISEW); Genuine Progress Indicator (GPI); costshifting; beyond GDP; threshold hypothesis; postgrowth;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rug:rugwps:21/1027. 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: . General contact details of provider: https://edirc.repec.org/data/ferugbe.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nathalie Verhaeghe (email available below). General contact details of provider: https://edirc.repec.org/data/ferugbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.