Tuesday, December 8, 2009

From GDP To Well-Being: Economics On The Road To Sustainability

Just back from the conference in Ancona, Italy, bearing the title of this post, papers from which can be accessed at http://fromgdptowellbeing.univpm.it/doc/final_programme.pdf. I gave a plenary talk on "Complex ecologic-economic dynamics and sustainability: Post Keynesian perspectives." Audience dominated by happiness researchers, who are split between happiness and satisfaction, with a smaller group of "capabilities" people arguing with them, who are in turn split between followers of Amartya Sen and Martha Nussbaum. Fewer sustainability types, with some trying to link to the happiness people, with one paper arguing that people in Latin America are happier when temperatures in winter are warmer, but are not much happier if highest temperatures in summer are cooler, although too much cloudiness and rain makes people less happy (so much for the psychological benefits of fighting global warming). I posed a "Principle of Appropriate Management Scale" based on the work of Elinor Ostrom, which triggered a lot of heated discussion.

This crowd was dominated by many policy wonks and technical statistical types (another plenary was by Enrico Giovannini, pres. of the Italian Statistical Association), with a lot of focus on how to redo national income accounts to account for happiness and sustainability, with Giovannini claiming that the "1980s social indicators movement failed" without explaining how or why. Much of what people there were discussing looks similar: laundry lists of things that should counted using all kinds of indexes, with a lot of funding for this and stated political support from UN, G-20, OECD, and EU. Bottom line may still be bottom line, however, with Finance ministers opposing. After all, suppose a member country of the EU is found to have high happiness and high sustainability, but low GDP and lousy budget balances: should it receive EU aid or provide it? Oh, and "social leisure" increases happiness, while unemployment lowers it.


Min said...

"After all, suppose a member country of the EU is found to have high happiness and high sustainability, but low GDP and lousy budget balances: should it receive EU aid or provide it?"

Human preferences, utilities, and values are multidimensional. Get used to it. ;) The proper question is not an either/or.

Sandwichman said...

Giovanni is almost correct that the 1980s social indicators movement failed but it was more of a 1970s movement. It did fail in the 1980s, with Thatcherism, Reaganism and Cost-Benefit analysis being the wooden stakes. Donald Stabile offered what I think is the best explanation for the failure of the indicator movement in an article titled, "The Accountants and the Price System." He bases his argument on John Maurice Clark's analysis of social overhead costs.

Without addressing those reasons, there is, of course, a danger that the well-being impulse could just as easily fail. Ostrom's work offers a much more solid foundation then the happiness people, in my opinion, so you're on the right track, Barkley. I would say Ostrom, Stabile and John Dryzek.

Anonymous said...

actually i think si's came from the 60's--i even have the books (journals). g-t real.
i do think north america was disocevered in the 70's (order of magnitude), however.

Myrtle Blackwood said...

Welcome back to America, Barkley ;-)

Interesting paper by Luca Stanca

"Overall, we conclude that the negative effect of parenthood on well-being is a robust finding that can be explained by the adverse impact of having children on financial satisfaction, which dominates the positive, but smaller,effect on non-financial satisfaction. On the basis of a purely rational-choice approach, the optimal number of children for a rational agent should be
zero. On the other hand, in a broader perspective, parenthood is a key determinant of an individual's non-financial well-being. Whether children
do make us happy depends on the relative weights of the financial and non-financial components in determining our overall life satisfaction.

Confirms what I've long suspected. Rationality leads to infertility. If you want money don't have kids.

Having known this, I am delighted to say that I am really enjoying my children.