Comprehensive wealth

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Holistic prosperity (English comprehensive wealth ) is a concept in the field of welfare economics . It serves the application-oriented operationalization of the concept of sustainability . Holistic prosperity is the sum of all social capital stocks.

history

The origins of the concept of holistic prosperity lie in the criticism of the usual economic operationalization of sustainability, which is usually based on the concept of the (green) net national product . With reference to the definition of income proposed by Erik Robert Lindahl as the amount of consumption that enables the same high level of consumption in the future, it is criticized that the net domestic product is not able to provide information about changes in the total capital stock of a society. Holistic prosperity is intended to close this gap.

The concept was developed and applied in its first form by World Bank economists in the late 1990s under the name genuine domestic savings (dt. True domestic savings ). The English terms genuine , inclusive or comprehensive investment / wealth were also used in later publications .

The net investment in holistic prosperity (short the holistic investment , English comprehensive investment ) is an indicator for the sustainability of the social development of an economy or a country. It is defined as the sum of the net changes in the stocks of different types of capital: real capital and money capital , natural capital , human capital and public knowledge. When an economy's holistic investment is positive, its welfare increases, and it does so in a sustainable manner.

application

As early as the late 1990s, World Bank economists were calculating genuine domestic savings for most countries in the world. In 2004 a group of economists led by Nobel Prize winner Kenneth Arrow carried out calculations of genuine investments for some countries. They used the following as proxies for the individual types of capital: net domestic investments, educational expenditure, costs of CO 2 emissions, the depletion of energy resources and raw material deposits and the deforestation of forests. The study's authors found that conventional GDP- based measures of economic and social development are likely to overestimate actual welfare growth.

Problems

Several problems with the concept of genuine investment have been identified. They include:

  • Underestimation of the value of natural capital ,
  • non-linear relationships between the value of natural capital and its condition,
  • the unrealistic assumption of substitutability between the individual types of capital.

The holistic prosperity approach has been criticized by a pioneer of growth criticism, Herman Daly . He accused Arrow and its co-authors of ignoring the physical limits to which economic activities are subject. They also assumed that the individual types of capital could be substituted. Arrow et al. rejected the criticism as unfounded and based on misunderstandings.

Individual evidence

  1. ↑ a b Partha Dasgupta: The welfare economic theory of green national accounts . In: Environmental and Resource Economics . tape 42 , 2009, p. 3–38 , doi : 10.1007 / s10640-008-9223-y (English, online [PDF; 500 kB ]).
  2. ↑ a b c Kirk Hamilton, Michael Clemens: Genuine Savings Rates in Developing Countries . In: World Bank Economic Review . tape 13 , no. 2 , 1999, p. 333–356 (English, worldbank.org [PDF; 141 kB ]).
  3. ↑ Partha Dasgupta: Human Well-Being and the Natural Environment . Oxford University Press, Oxford 2001, ISBN 0-19-924788-9 , pp. xxi (English).
  4. ↑ Partha Dasgupta, Karl-Göran Mäler: Net national product, wealth, and social well-being . In: Environment and Development Economics . tape 5 , 2000, pp. 69–93 (English, bdresearch.org [PDF; 132 kB ]).
  5. ↑ a b c Kenneth Arrow, Partha Dasgupta, Lawrence Goulder, Gretchen Daily, Paul Ehrlich, Geoffrey Heal, Simon Levin, Karl-Göran Mäler, Stephen Schneider, David Starrett, Brian Walker: Are We Consuming Too Much? In: The Journal of Economic Perspectives . tape 18 , no. 3 , 2004, p. 147–172 (English, online [PDF]).
  6. ^ Herman Daly et al .: Are we consuming too much - for what? In: Conservation Biology . tape 21 , no. 5 , 2007, p. 1359–1362 , doi : 10.1111 / j.1523-1739.2007.00770.x (English).
  7. ↑ Kenneth Arrow et al .: Consumption, investment, and future well-being: Reply to Daly et al . In: Conservation Biology . tape 21 , no. 5 , September 19, 2007, p. 1363-1365 , doi : 10.1111 / j.1523-1739.2007.00783.x (English).