University Geir B. Asheim — Articles


A general approach to welfare measurement through national income accounting

This is an electronic version (in pdf format, 169 KB) of an article published in Scandinavian Journal of Economics. Complete citation information for the final version of the paper, as published in the print edition of Scandinavian Journal of Economics , is available on the Blackwell Synergy online delivery service, accessible via the journalís website at http://www.blackwellpublishing.com/journal.asp?ref=0347-0520 or http://www.blackwell-synergy.com.

Abstract:
We develop a framework for analyzing national income accounting using a revealed welfare approach that is sufficiently general to cover, e.g., both the standard discounted utilitarian and maximin criteria as special cases. We show that the basic welfare properties of comprehensive national income accounting, previously ascribed only to the discounted utilitarian case, extend to this more general framework. In particular, it holds under a wider range of circumstances that real NNP growth (or equivalently, a positive value of net investments) indicates welfare improvement. We illustrate the applicability of our approach in the Dasgupta-Heal-Solow model of capital accumulation and resource depletion.