Chapter 7: An Assessment of Various Measures of Sustainable Economic Welfare
7. An assessment of various measures of sustainable economic welfare INTRODUCTION Ecological economists have long believed that the continued growth of macroeconomic systems is both ecologically unsustainable and existentially undesirable. Consistent with this belief, ecological economists have put forward a ‘threshold hypothesis’ – the notion that when macroeconomic systems expand beyond a certain size, the additional beneﬁts of growth are exceeded by the attendant costs (Max-Neef, 1995). In order to support their belief, ecological economists have developed a number of indexes to measure and compare the beneﬁts and costs of growth. The ﬁrst of them, the Index of Sustainable Economic Welfare (ISEW), was originally calculated for the USA by Daly and Cobb (1989). It has since been calculated for the UK, most western European and Scandinavian countries, Canada, Australia, Chile, Japan and Thailand. Over this time, many of the methods used to calculate the index have been revised. As pointed out in Chapter 6, the ISEW has also been given a variety of diﬀerent names – for example, a Genuine Progress Indicator or GPI (Redeﬁning Progress, 1995) and a Sustainable Net Beneﬁt Index or SNBI (Lawn and Sanders, 1999; Lawn, 2000). While there has been a variation in the disparity between GDP and the chosen index calculated for diﬀerent countries, the trend movement in the ISEW, GPI and SNBI is very consistent. That is, up to a point, the growth of macroeconomic systems seems to be beneﬁcial to human well-being. Beyond this point, growth appears...
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