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Development Welfare or well-being?. Leif Bratt Aug 31 2011. Definition & synonyms. Definition

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Development welfare or well being
DevelopmentWelfare or well-being?

Leif Bratt

Aug 31 2011


Definition synonyms
Definition & synonyms

Definition

  • act of improving by expanding or enlarging, refining a process in which something passes by degrees to a more advanced mature stage, a recent event that has some relevance for the present situation, a state in which things are improving, the result of developing

Synonyms

  • advance, change, expansion, enlargement, growth, increase, improvement, progress


Development as

  • evolution (homo habilis, erectus, sapiens) or individual human bio-mental development (baby – child – teenager – adult – old) and the question of influential factors (nature vs nurture)

  • Different socio-cultural stages in society; paleolithicum (hunter/gatherer), neolithicum (farming), metal ages (hierarchies), ancient (slavery), medieval (church & feudalism), early modern (kings, commerce, renaissance) & modern times (parlamentarism, capitalism) and the question of influential factors [institutions (values, norms, legislation), power (political, economic military), knowledge, distribution, technical skills)

Development as

  • economic changes in society as “progress” as upgraded standard of living or “materialistic” welfare, measured as economic growth (annually higher GDP) , or expanded indices as HDI, GPI , ESI

  • or on a social or individual level of improved well-being?

    Today’slecture

    measuringthistypeofdevelopment



Early indices welfare developmant
Early indices welfare/developmant

  • No of electric bulbs

  • No of telephones/1000

  • No of cars/1000

  • TVs/1000

  • Life expectancy at birth

  • Persons/physician

  • Energy consumption/cap

  • 43 to 83 years



Micro economics welfare

price

demand

supply

Consumer surplus

p0

Producer surplus

q0

quantity

Micro-economics welfare


Traditional economic schools
Traditionaleconomic schools;

  • Neoclassical economics – the free market.

  • Institutional economics – governmental policies

    … and welfare is measured as Gross Domestic Product (GDP)

… it all started with

Adam Smith:

The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.(Smith 1776:vol I,I,1)


Gdp expressed 3 ways
GDP expressed 3 ways

the value of production of goods and services, at the consumer level, that is traded/registered on the market in a country in 1 year

… or GDP as GNI

  • the sum of profits and salaries (interests) in that production +

  • Public salaries


But also as

But also as;

The supply balance or expenditures

GDP = (private) consumption + investments/savings + government spending + (exports – imports)

Compare

China; (private) consumption + investments/savings + government spending + (exports – imports)

US; (private) consumption + investments/savings* + government spending + (exports – imports)

*they borrow to consume. Welfare is higher than own production


Sources of welfare
Sources of welfare

  • Market goods

  • Market disutilities

  • Public goods

  • Private goods

  • Nature goods

  • ”Black” market goods

  • GDP

  • GDP

  • partly GDP (salaries)

  • no

  • no

  • no




Just distribution for optimal welfare

Utility

quantity

Just distribution for optimal welfare ?

Diminishing Marginal Utility


Gdp and gini
GDP and Gini

Country

Norway

USA

Sweden

Brazil

China

India

Liberia

Congo

GDP

53.433

45,592

36,712

9,567

5,383

2,753

362

298

Gini

0.26

0.41

0.25

0,55

0.42

0.37

0.53

0.44

Gini-coefficient = A/(A+B)

If = 0 means all have same income

If = 1 means one person has

it all, the rest nothing


1 unit 2000 r 4
1 unit, 2000 år, 4%

1

51

2 551

128 825

6 506 324

328 601 582

16 596 005 851

838 180 415 568

42 332 258 457 335

2 137 988 519 910 810

107 978 999 416 659 000

5 453 473 770 527 630 000

275 427 410 204 771 000 000

13 910 447 080 919 500 000 000

702 546 409 041 865 000 000 000

35 482 069 985 704 100 000 000 000

1 792 020 106 098 610 000 000 000 000

90 505 882 603 679 500 000 000 000 000

4 570 994 911 270 420 000 000 000 000 000

230 857 861 144 273 000 000 000 000 000 000

11 659 464 315 022 800 000 000 000 000 000 000


Gdp and depreciation depletion
GDP and depreciation/depletion

GDP – Depreciation of Human made capital =NDP

NDP – Depletion of Nature capital = eaNDP

eaNDP – defensive & rehab expenditures = SNDP



Footprint vs gdp
Footprint vs GDP


Critics of gdp as a welfare measurement
Critics of GDP as a welfare measurement

Spatial fallacy

production there – consumptionhere

Time fallacy

consumptionnow – consequences later

Holisticfallacy

Repair is includedand only a part of the economy


Human development index hdi
Human Development Index (HDI)

HDI an index of "human development“

HDI combines three dimensions:

  • Life expectancy

  • Knowledge and education, (adult literacy & gross enrollment ratio)

  • Standard of living as measured by the logarithm of GDP/capita at purchasing power parity (PPP).


Genuine progress index gpi
Genuine Progress Index (GPI)

GDP

has functioned as an

"income sheet"

GPI

will function as a

"balance sheet"


Starts with the GDP number and,

  • +/- Income Distribution (gini-coefficient)

  • + Housework, Volunteering, and Higher Education

  • - Crime

  • - Resource Depletion

  • - Pollution

  • - Long-Term Environmental Damage

  • +/- Changes in Leisure Time

  • - Defensive Expenditures

  • +/- Lifespan of Consumer Durables & Public Infrastructure

  • +/- Dependence on Foreign Assets


Epi yale univ wef
EPI (Yale univ. & WEF)



Dodds model of human well-being

  • Well-beings as a State of mind

  • Mental/feel good factors of well-being

  • Well-beings as a State of the world

  • Non mental Constituents and Determinants of welfare/well-being

  • 3. Well-being as human capability

  • 4. Well-beings as the satisfaction of underlying needs


Well being vs welfare enjoyment of life vs production of goods
Well-being vs Welfare"Enjoyment of life" vs. "production of goods“


Max neef underlaying needs
Max-Neefunderlayingneeds

No hierarchy, hard to operationalize, more philosophical


Quality of life index qli

Quality of life Index (QLI)

An hierarcy Index of

National footprint/globalbiocapacity (>1 bad)

Global Gini (> 0,3 = bad)

4 Doddswell-beingIndices


Prosperity w o growth http www sd commission org uk publications php id 914
Prosperity w/o growthhttp://www.sd-commission.org.uk/publications.php?id=914

Every society clings to a myth by which it lives. Ours is the myth of economic growth. For the last five decades the pursuit of growth has been the single most important policy goal across the world. The global economy is almost five times the size it was half a century ago. If it continues to grow at the same rate the economy will be 80 times that size by the year 2100.

An even stronger finding is that the requirements of prosperity go way beyond material sustenance. Prosperity has vital social and psychological dimensions. To do well is in part about the ability to give and receive love, to enjoy the respect of your peers, to contribute useful work, and to have a sense of belonging and trust in the community. In short, an important component of prosperity is the ability to participate meaningfully in the life of society.


Well-being is multi-dimensional

1. Material living standards (income, consumption and wealth);

  • Give more prominence to the distribution of income, consumption and wealth

  • Broaden income measures to non-market activities

    2. Health;

    3. Education;

    4. Personal activities including work

    5. Political voice and governance;

    6. Social connections and relationships;

    7. Environment (present and future conditions);

    8. Insecurity, of an economic as well as a physical nature.

    Report by the Commission on the Measurement of Economic Performance and Social Progress

    http://www.stiglitz-sen-fitoussi.fr/en/index.htm

The starting point for, the European Commission Communication on GDP, was an awareness of the need to complement GDP with measures of equitability and sustainability, and of the fact that all dimensions of well-being were not covered by GDP.

GDP and beyond – Measuring progress in a changing world

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0433:FIN:EN:PDF


Beyond gdp http www beyond gdp eu index html
Beyond GDP http://www.beyond-gdp.eu/index.html

“GDP is an indicator of economic market activity. It was not intended to be an accurate measure of well-being. Even Simon Kuznets, . . . one of the main originators of GDP, said: 'the welfare of a nation can scarcely be inferred from a measure of national income'”.

"We cannot face the challenges of the future with the tools of the past“

"It's time to go beyond GDP”.

Manuel Barosso

  • Genuine Savings

  • The Happy Planet Index

  • World Database of Happiness

  • Living Planet Index


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