Sustainable Economic Wealth Index

The index of sustainable economic welfare (English index of sustainable economic welfare ISEW, for short) is an economic indicator that the traditional GDP corrected (GDP) by wealth-related variables. The ISEW has meanwhile been further developed into an indicator of real progress (GPI).

calculation

Instead of simply summarizing all expenditure, as is the case with the creation of GDP, the ISEW integrates additional factors and indicators of private consumption (price-adjusted in real terms) with the aim of correcting GDP statements about overall prosperity (mostly subtractively). Which includes:

• Income distribution (the more unequal the distribution, the lower the increase in overall prosperity)
• unpaid housework and family work
• public health expenditure
• education
• Air pollution and general pollution
• Decrease in resources
• Global warming costs

History and interpretation

The index is based on the ideas of William Nordhaus and James Tobin and their Measure of Economic Welfare (MEW). It was introduced in 1989 by Herman E. Daly and John B. Cobb . The two authors later added additional cost factors to their definition of the ISEW, which led to the development of the GPI.

Calculations show that in countries with unchecked economic growth , the ISEW often stagnated or even declined. This development shows that the growth achieved is not sustainable and that wealth is increasingly unevenly distributed.

See also

• Human Development Index
• Measures of inequality : Theil index , Hoover inequality , Gini coefficient
• Ecological Footprint
• Limits to growth

literature

• William Nordhaus, James Tobin: Is growth obsolete? Columbia University Press, New York 1972, ISBN 0-87014-254-2 ( Online at EconPapers Online at NBER ).
• Herman Daly, John Cobb: For the Common Good . Beacon Press, Boston 1989, ISBN 0-8070-4705-8 .

Web links

• Index for Sustainable Economic Welfare , entry in the environmental lexicon .
• Mario Sixtus: What is wealth? As with GDP, money is crucial, it just depends on how you calculate it at telepolis , 2003.
• ISEW , entry in wirtschaftslehre.ch .

Individual evidence

1. ↑ Measuring progress at Friends of the Earth ( Memento from July 13, 2007 in the Internet Archive )