TY - JOUR
T1 - Testing genuine savings as a forward-looking indicator of future well-being over the (very) long-run
AU - Greasley, David
AU - Hanley, Nick
AU - Kunnas, Jan
AU - McLaughlin, Eoin
AU - Oxley, Les
AU - Warde, Paul
N1 - Funding Information:
We thank the Leverhulme Trust for funding this work. We also thank comments from participants at the European Social Science History conference April 2012, the Groningen FRESH meeting November 2012 and participants in a seminar on long-run indicators of sustainable development and well-being at University of Edinburgh, October 2011, especially Kirk Hamilton and Giles Atkinson.
PY - 2014/3
Y1 - 2014/3
N2 - Genuine Savings (GS) have been much used in recent years as an indicator of a country's sustainability. According to some theorists (e.g. Arrow et al., 2012), under certain conditions a country with a positive level of GS should experience non-declining future utility, given the assumption of unlimited substitutability among all forms of capital (sometimes called "weak" sustainability). This paper reports the first very long-run tests of GS (also called comprehensive investment or adjusted net savings) as a forward-looking indicator of future well-being. We assemble data for British capital back to 1765, and construct several net investment measures which are used as indicators of two alternative measures of future well-being: consumption per capita and real wages. An allowance for a "value of time" due to exogenous technological progress is included in some GS measures, and we demonstrate the importance of this measure and the choice of discount rate over the very long-run. On the whole, our results do not reject the postulated relationship between GS and future well-being, and show GS can be a forward looking indicator of future well-being for periods of up to 100 years.
AB - Genuine Savings (GS) have been much used in recent years as an indicator of a country's sustainability. According to some theorists (e.g. Arrow et al., 2012), under certain conditions a country with a positive level of GS should experience non-declining future utility, given the assumption of unlimited substitutability among all forms of capital (sometimes called "weak" sustainability). This paper reports the first very long-run tests of GS (also called comprehensive investment or adjusted net savings) as a forward-looking indicator of future well-being. We assemble data for British capital back to 1765, and construct several net investment measures which are used as indicators of two alternative measures of future well-being: consumption per capita and real wages. An allowance for a "value of time" due to exogenous technological progress is included in some GS measures, and we demonstrate the importance of this measure and the choice of discount rate over the very long-run. On the whole, our results do not reject the postulated relationship between GS and future well-being, and show GS can be a forward looking indicator of future well-being for periods of up to 100 years.
KW - British economic history
KW - Comprehensive investment
KW - Future well-being
KW - Genuine savings
KW - Sustainable development
KW - Technological progress
UR - http://www.scopus.com/inward/record.url?scp=84894282103&partnerID=8YFLogxK
U2 - 10.1016/j.jeem.2013.12.001
DO - 10.1016/j.jeem.2013.12.001
M3 - Article
AN - SCOPUS:84894282103
SN - 0095-0696
VL - 67
SP - 171
EP - 188
JO - Journal of Environmental Economics and Management
JF - Journal of Environmental Economics and Management
IS - 2
ER -