Index of Sustainable Economic Welfare
Encyclopedia
The Index of Sustainable Economic Welfare is an economic
indicator intended to replace the gross domestic product
.
Rather than simply adding together all expenditures like the gross domestic product
, consumer expenditure is balanced by such factors as income distribution and cost associated with pollution and other unsustainable costs. It is similar to the genuine progress indicator
.
The index of sustainable economic welfare (ISEW) is roughly defined by the following formula.
ISEW = personal consumption
+ public non-defensive expenditures
- private defensive expenditures
+ capital formation
+ services from domestic labour
- costs of environmental degradation
- depreciation of natural capital
and James Tobin
in their measure of economic welfare. It was first developed in 1989 by Herman Daly
and John B. Cobb
.
They later went on to add several other "costs" to the definition of ISEW. This later work formed the genuine progress indicator
: see sustainability measurement
.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
indicator intended to replace the gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
.
Rather than simply adding together all expenditures like the gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
, consumer expenditure is balanced by such factors as income distribution and cost associated with pollution and other unsustainable costs. It is similar to the genuine progress indicator
Genuine Progress Indicator
The genuine progress indicator is an alternative metric system which is an addition to the national system of accounts that has been suggested to replace, or supplement, gross domestic product as a metric of economic growth...
.
The index of sustainable economic welfare (ISEW) is roughly defined by the following formula.
ISEW = personal consumption
+ public non-defensive expenditures
- private defensive expenditures
+ capital formation
+ services from domestic labour
- costs of environmental degradation
- depreciation of natural capital
History
The index is based on the ideas presented by William NordhausWilliam Nordhaus
William Dawbney "Bill" Nordhaus is the Sterling Professor of Economics at Yale University. Nordhaus lives in New Haven, Connecticut, with his wife Barbara.-Career:...
and James Tobin
James Tobin
James Tobin was an American economist who, in his lifetime, served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to...
in their measure of economic welfare. It was first developed in 1989 by Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....
and John B. Cobb
John B. Cobb
John B. Cobb, Jr. is an American United Methodist theologian who played a crucial role in the development of process theology. He integrated Alfred North Whitehead's metaphysics into Christianity, and applied it to issues of social justice.-Biography:John Cobb was born in Kobe, Japan in 1925 to...
.
They later went on to add several other "costs" to the definition of ISEW. This later work formed the genuine progress indicator
Genuine Progress Indicator
The genuine progress indicator is an alternative metric system which is an addition to the national system of accounts that has been suggested to replace, or supplement, gross domestic product as a metric of economic growth...
: see sustainability measurement
Sustainability measurement
Sustainability measurement is a term that denotes the measurements used as the quantitative basis for the informed management of sustainability...
.