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Sustaining economic welfare : estimating changes in per capita wealth

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  • Hamilton, Kirk

Abstract

The World Bank's"World Development Indicators 1999"highlights for the first time the"genuine"rate of saving for more than 100 countries around the globe. Genuine saving values the total change in economic assets, thereby providing an indicator of whether an economy is on a sustainable path. The Bank's new estimates of genuine saving broaden the usual national accounts definitions of assets to include human capital, minerals, energy, forest resources, and the stock of atmospheric carbon dioxide. Genuinesaving measures the change in total assets rather than the change in per capita assets. Genuine saving data may answer the question,"Did total wealth rise or fall over the acoounting period?"But they do not address the question of whether an economy is sustainable with a growing population. Genuine saving could be positive even though per capita wealth is declining. The author explores the issue of measuring changes in per capita wealth--factoring in both growth in total assets (as measured by genuine saving) and population growth--as a more comprehensive indicator of sustainability. First he develops a theoretical approach to estimating total wealth. Then he presents cross-country estimates of changes in per capita wealth. Based on preliminary estimates, he concludes that in the majority of countries below the median per capita income, wealth is accumulating more slowly than the population is growing.

Suggested Citation

  • Hamilton, Kirk, 2000. "Sustaining economic welfare : estimating changes in per capita wealth," Policy Research Working Paper Series 2498, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2498
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    References listed on IDEAS

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    1. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," The World Bank Economic Review, World Bank, vol. 13(2), pages 333-356, May.
    2. Weitzman, Martin L. & Lofgren, Karl-Gustaf, 1997. "On the Welfare Significance of Green Accounting as Taught by Parable," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 139-153, February.
    3. David Pearce, 1999. "Economics and Environment," Books, Edward Elgar Publishing, number 354.
    4. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    5. Giles Atkinson & Richard Dubourg & Kirk Hamilton & Mohan Munasinghe & David Pearce & Carlos Young, 1997. "Measuring Sustainable Development," Books, Edward Elgar Publishing, number 1242.
    6. Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
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    Cited by:

    1. Simone Valente, 2005. "Genuine dissaving and optimal growth," CER-ETH Economics working paper series 05/38, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Harris, Michael & Pearson, Leonie J., 2004. "Using 'Inclusive Wealth' to Measure and Model Sustainable Development in Australia: A working example," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58457, Australian Agricultural and Resource Economics Society.
    3. Eric Neumayer, 2004. "Sustainability and Well-being Indicators," WIDER Working Paper Series RP2004-23, World Institute for Development Economic Research (UNU-WIDER).
    4. Alisjahbana, Armida & Yusuf, Arief Anshory, 2003. "Assessing Indonesia's sustainable development: long-run trend, impact of the crisis, and adjustment during the recovery period," MPRA Paper 1736, University Library of Munich, Germany.
    5. Atkinson, Giles & Hamilton, Kirk, 2003. "Savings, Growth and the Resource Curse Hypothesis," World Development, Elsevier, vol. 31(11), pages 1793-1807, November.

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