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Sustainability and Well-being Indicators

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  • Neumayer, Eric

Abstract

This paper provides a review and critical discussion of indicators, which attempt to combine the measurement of sustainability with that of well-being. It starts with some commonly agreed definitions of sustainability, showing how most well-being indicators tell us little if anything at all about this issue. Sustainability is most commonly defined in economics as non-declining utility or well-being over time. Yet, due to its future orientation, most indicators of sustainability such as Genuine Savings (GS) have merely focused on the capacity to provide utility in the future, but have not included the measurement of current well-being. Indicators of well-being such as the Human Development Index (HDI), on the other hand, have typically failed to account for sustainability in their measurement of current well-being. The paper then critically reviews the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI), which are the most prominent examples of an indicator, which attempts to fully integrate the measurement of welfare with that of sustainability into one single indicator. Such an integration, whilst seemingly attractive, is rendered difficult by the fact that what contributes to current well-being need not contribute at all or in the same way to sustainability and vice versa. We also review various proposals of extending a welfare indicator, namely the HDI, with sustainability considerations without full integration of both concepts. All of these proposals suffer from a range of fundamental conceptual problems. As one possible alternative, we propose a combination of the HDI and GS, which holds great promise for an assessment of wellbeing and its sustainability, particularly in developing countries.
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Suggested Citation

  • Neumayer, Eric, 2004. "Sustainability and Well-being Indicators," WIDER Working Paper Series 023, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:rp2004-23
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:energy:v:141:y:2017:i:c:p:1254-1268 is not listed on IDEAS
    2. Arman, Michael & Zuo, Jian & Wilson, Lou & Zillante, George & Pullen, Stephen, 2009. "Challenges of responding to sustainability with implications for affordable housing," Ecological Economics, Elsevier, vol. 68(12), pages 3034-3041, October.
    3. Brennan, Andrew John, 2008. "Theoretical foundations of sustainable economic welfare indicators -- ISEW and political economy of the disembedded system," Ecological Economics, Elsevier, vol. 67(1), pages 1-19, August.
    4. Brennan, Andrew John, 2013. "A critique of the perceived solid conceptual foundations of ISEW & GPI — Irving Fisher's cognisance of human-health capital in ‘net psychic income’," Ecological Economics, Elsevier, vol. 88(C), pages 159-166.
    5. M. Fleurbaey., 2012. "Beyond GDP: The Quest for a Measure of Social Welfare," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    6. Ollivier, TO, 2009. "The usefulness of aggregate sustainability indicators for policy making: What do they say for Madagascar?," MPRA Paper 16607, University Library of Munich, Germany.
    7. Cook, David & Davidsdottir, Brynhildur & Petursson, Jón Geir, 2015. "Accounting for the utilisation of geothermal energy resources within the genuine progress indicator—A methodological review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 211-220.
    8. 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.
    9. Dietz, Simon & Neumayer, Eric, 2007. "Weak and strong sustainability in the SEEA: Concepts and measurement," Ecological Economics, Elsevier, vol. 61(4), pages 617-626, March.
    10. repec:eee:ecolec:v:144:y:2018:i:c:p:292-303 is not listed on IDEAS
    11. Rahman, Tauhidur & Mittelhammer, Ron C. & Wandschneider, Philip, 2005. "Measuring the Quality of Life across Countries: A Sensitivity Analysis of Well-being Indices," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
    12. repec:eee:ecolec:v:142:y:2017:i:c:p:1-11 is not listed on IDEAS

    More about this item

    Keywords

    Geary-Khamis bias; the Afriat index;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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