The effect of air quality on welfare accounting

Arbeitspapier

For several decades, there has been a discussion in economics on how to appropriately measure economic welfare. Although it is common perception that a simple GDP evaluation bears several shortcomings, GDP per capita is still the most prominent measure of countries' welfare and of its development over time. In a recent paper, Jones and Klenow (2016) extend the huge existing literature on alternative welfare measures by a concept that is based on a utility framework and that incorporates, besides consumption, also life expectancy, inequality, and leisure. In this paper, we add a component of environmental quality, in particular air pollution, to this framework and show that for some country groups accounting for air quality remarkably changes their relative welfare position, both in terms of levels and growth rates over time. Especially for some emerging countries we find strong welfare reductions due to high levels of air pollution. Nevertheless, on average, our welfare measure is still highly correlated with GDP per capita. Our results highlight the importance of environmental aspects in welfare accounting.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 17-2018

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Health Behavior ; Economywide Country Studies: Latin America; Caribbean ; Comparative Studies of Countries ; Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling ; Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
• Subject: Economic Welfare ; Economic Development ; Air Pollution ; Environmental Economics

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Balleer, Almut ; Endrikat, Morten
• Event: Veröffentlichung
• (who): Philipps-University Marburg, School of Business and Economics
• (where): Marburg
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/200673
• Last update: 10.03.2025, 11:43 AM CET