Working Paper: NBER ID: w16599
Authors: Kenneth J. Arrow; Partha Dasgupta; Lawrence H. Goulder; Kevin J. Mumford; Kirsten Oleson
Abstract: We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth - one that accounts for natural capital and human capital as well as reproducible capital - is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant reductions in the natural resource base. We find that the value of "health capital" is very large relative to other forms of capital. As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.
Keywords: No keywords provided
JEL Codes: D69; O10; O47; O50; Q32; Q39
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| comprehensive wealth (E21) | intergenerational wellbeing (I31) |
| decline in comprehensive wealth (E21) | decline in intergenerational wellbeing (D15) |
| human capital (J24) | comprehensive wealth (E21) |
| health capital (I15) | comprehensive wealth (E21) |
| health capital (I15) | intergenerational wellbeing (I31) |
| governance and policy (G38) | sustainability of development paths (Q01) |