Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 32/2002: A General Approach to Welfare Measurement through National Income Accounting

Geir Asheim () and Wolfgang Buchholz ()
Additional contact information
Geir Asheim: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Wolfgang Buchholz: Department of Economics, University of Regensburg,, Postal: D-93040 Regensburg, Germany.

Abstract: We develop a framework for analyzing national income accounting using a revealed welfare approach that is sufficiently general to cover, e.g., both the standard discounted utilitarian and maximin criteria as special cases. We show that the basic welfare properties of comprehensive national income accounting, which were previously ascribed only to the discounted utilitarian case, in fact extend to this more general framework. In particular, it holds under a wide range of circumstances that real nnp growth (or equivalently, a positive value of net investments) indicates welfare improvement. We illustrate the applicability of our approach by considering resource allocation mechanisms in the Dasgupta-Heal-Solow model of capital accumulation and resource depletion.

Keywords: National income accounting; dynamic welfare

JEL-codes: C43; O47; Q01

33 pages, June 19, 2003

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