A Comparison Of Current Well-Being And Sustainability?

Research on measurements of current well-being and sustainability as a complement to or substitute for GDP is widespread and diverse. Whereas some authors focused on modest corrections to GDP, others have developed completely new indices based on entirely different data. In general, there are three types of measurements that were developed since the introduction of GDP: subjective measures of well-being, composite indices and monetary approaches. Subjective measures are based on surveys about the happiness or well-being self-reported by the respondents and can be misleading in their results (Fleurbaey and Blanchet, 2013) due to differences in perception across nations. In composite indices, income or GDP per capita is usually one component among others such as health, poverty and employment. Monetary approaches come in different forms; either by correcting GDP, focusing on ‘equivalent income’ or calculating capital stocks and investments (stock-based approach). Although it is not the intention of this thesis to provide a complete survey of wealth measurements, several contributions to literature are provided in this section as background. Arrow et al. (2004) encountered the difficulty that arises in assessing both current well-being and sustainability in one wealth measure. Their efforts direct towards distinguishing between assessing current well-being and measuring sustainability; the goals as well as the implications for policy-makers of each of these approaches are different. The decisions policy-makers make depend on what is measured, how well these measurements are constructed and how well these are understood (Stiglitz et al. 2010).

2.1 The Maximize Present Value criterion

Arrow et al. (2004) developed two criterions to ...

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...f achieving sustainable growth, policy-makers are interested in whether the current development is leading to any overconsumption or underinvestment. Although the MPV criterion (Arrow et al., 2004) concentrates on overconsumption, the criterion does not require well-being to be equal or higher for a future generation. The welfare of future generations is therefore largely neglected by measures of current well-being, although the task of governments and other policy-makers is to ensure inter-generational social welfare (Arrow et al. 2012). It is of low interest to promote current well-being if this is at the expense of future generations; we should therefore focus on “meeting the needs of the present without compromising the future to meet their own needs” (Brundtland Commission, 1987). Measuring sustainability focuses on this sustainable development of nations.