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Genuine savings and future well-being in Germany, 1850-2000

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  • Blum, Matthias
  • Hanley, Nicholas
  • McLaughlin, Eoin

Abstract

Genuine Savings (GS), also known as ‘net adjusted savings', is a composite indicator of the sustainability of economic development. Genuine Savings reflects year-on-year changes in the total wealth or capital of a country, including net investment in produced capita, investment in human capital, depletion of natural resources, and damage caused by pollution. A negative Genuine Savings rate suggests that the stock of national wealth is declining and that future utility must be less than current utility, indicating that economic development is non-sustainable (Hamilton and Clemens, 1999). We make use of data over a 150 year period to examine the relationship between Genuine Savings and a number of indicators of well-being over time, and compare the relative changes in human, produced, and components of natural capital over the period. Overall, we find that the magnitude of genuine savings is positively related to changes in future consumption, with some evidence of a cointegrating relationship. However, the relationships between genuine savings and infant mortality or average heights are less clear.

Suggested Citation

  • Blum, Matthias & Hanley, Nicholas & McLaughlin, Eoin, 2013. "Genuine savings and future well-being in Germany, 1850-2000," Stirling Economics Discussion Papers 2013-13, University of Stirling, Division of Economics.
    • Handle: RePEc:stl:stledp:2013-13
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    File URL: http://hdl.handle.net/1893/18205
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    Cited by:

    1. Blum, Matthias & Strebel, Matthias, 2016. "Max Weber and the First World War: Protestant and Catholic living standards in Germany, 1915–1919," Journal of Institutional Economics, Cambridge University Press, vol. 12(3), pages 699-719, September.
    2. Nick Hanley & Les Oxley & David Greasley & Eoin McLaughlin & Matthias Blum, 2016. "Empirical Testing of Genuine Savings as an Indicator of Weak Sustainability: A Three-Country Analysis of Long-Run Trends," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 313-338, February.
    3. Juan Labat & Henry Willebald, 2019. "Do we need just one sustainable development indicator? Could Genuine Savings be that one?," International Journal of Environmental Sciences & Natural Resources, Juniper Publishers Inc., vol. 16(3), pages 78-80, January.

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    Keywords

    Sustainability; economic development; Net adjusted savings; Genuine Savings; well-being;
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