A critique of the perceived solid conceptual foundations of ISEW & GPI — Irving Fisher's cognisance of human-health capital in ‘net psychic income’

Andrew John Brennan

Ecological Economics, 2013, vol. 88, issue C, 159-166

Abstract: This paper puts forward a political economy critique of the perceived solid conceptual foundations of Sustainable Well-Being Indicators (SWBIs) such as ISEW and GPI. A particular version of ‘entropic net psychic income’ has been implanted as the main conceptual basis for these aggregated measures of sustainable economic welfare. However, a well-known limitation of SWBIs is that they do not prudently factor-in measures of investment and depreciation of ‘human-health capital’—yet this is a critical aspect of sustainable well-being. It is argued that under Fisher's psychic income framework, the heart of the indicator is a theory that specifies accounting for some sort of change in the human psyche, i.e. the stock (or fund) of human-health capital. Advocates of SWBIs cannot adequately account for the degree of human health or knowledge, because this is not their reference point—‘personal consumption expenditures’ is their reference point. Political economy seeks to avoid abstracting from the whole reality, recognising that endogenous processes of human-health capital formation are overdetermined. This paper thus argues that there is a significant conceptual shortcoming in ISEW and GPI, which, if left unattended will undermine the measure of theoretical legitimacy and empirical efficacy.

Keywords: ISEW; GPI; Net psychic income; Human-health capital; Political economy (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0921800913000049
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:88:y:2013:i:c:p:159-166

DOI: 10.1016/j.ecolecon.2012.12.026

Access Statistics for this article

Ecological Economics is currently edited by C. J. Cleveland

More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().