| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5050147 | Ecological Economics | 2013 | 8 Pages |
This paper puts forward a political economy critique of the perceived solid conceptual foundations of Sustainable Well-Being Indicators (SWBIs) such as ISEW and GPI. A particular version of 'entropic net psychic income' has been implanted as the main conceptual basis for these aggregated measures of sustainable economic welfare. However, a well-known limitation of SWBIs is that they do not prudently factor-in measures of investment and depreciation of 'human-health capital'-yet this is a critical aspect of sustainable well-being. It is argued that under Fisher's psychic income framework, the heart of the indicator is a theory that specifies accounting for some sort of change in the human psyche, i.e. the stock (or fund) of human-health capital. Advocates of SWBIs cannot adequately account for the degree of human health or knowledge, because this is not their reference point-'personal consumption expenditures' is their reference point. Political economy seeks to avoid abstracting from the whole reality, recognising that endogenous processes of human-health capital formation are overdetermined. This paper thus argues that there is a significant conceptual shortcoming in ISEW and GPI, which, if left unattended will undermine the measure of theoretical legitimacy and empirical efficacy.
⺠A critique of the perceived solid conceptual foundations of ISEW/GPI is presented. ⺠Erroneous to oversimplify Fisher's net psychic income in the theory of ISEW/GPI ⺠Heart of Fisher's “well-being indicator” would consider the supremacy of health. ⺠Psychic income & outgo experienced are inextricably linked with the human psyche. ⺠Excluding human-health capital has empirical & conceptual implications for ISEW/GPI.
