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Human Well-Being and the Natural Environment$

Partha Dasgupta

Print publication date: 2001

Print ISBN-13: 9780199247882

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199247889.001.0001

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A.3. Measuring Current Well‐Being

A.3. Measuring Current Well‐Being

Source:
Human Well-Being and the Natural Environment
Publisher:
Oxford University Press

In Part II practical methods for estimating current well‐being were reviewed. Here I offer the theoretical reasoning underlying the methods.

Let the resource allocation mechanism be α. Knowledge of α enables us to make an economic forecast. Current well‐being along the forecast is U(C t, L t). So

d U t / d t = U C  d C t / d t + U L  d L t / d t .
(A.8)
U C and −U L reflect the social worth of consumption and labour effort, respectively, in well‐being numeraire. Equation (A.8) yields a method for judging whether or not current well‐being is improving over time.
  1. Proposition 1: If the accounting value of changes in the flow of consumption services is positive, current well‐being can be said to be improving.

International time series of the quality of life, such as those published annually in the World Bank's World Development Report and UNDP's Human Development (p.242) Report, are based implicitly on Proposition 1. The reports include such indices as private consumption and life expectancy at birth, which serve as surrogates for key components of what we are calling consumption and leisure here.12 But the reports veer away from Proposition 1 when they include gross national product (GNP). We noted in Chapters 4 and 5 that GNP is neither a measure of current well‐being, nor a measure of intergenerational well‐being. This is why I dropped it in Chapter 5 when illustrating practical ways of measuring current well‐being.

Notes:

(12) Chapter 5.