A note on sustainability and habit formation

Rintaro Yamaguchi

Letters in Spatial and Resource Sciences, 2014, vol. 7, issue 3, 149-157

Abstract: The link with subjective well-being has not been addressed in the literature of sustainability, the latter defined by social well-being improvement. We explicitly derive genuine savings as an indicator of sustainability inclusive of one form of subjective well-being, namely habit formation, building on the work of Aronsson and Löfgren (Econ Lett 98:84–88, 2008 ). We show that, along an optimal path, the effect of habits on well-being improvement is negative, as long as the current output is larger than the current habit stock. Moreover, a numerical example for an optimal balanced growth path hints that this adjustment is potentially large in the case of a large weight parameter on habits. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Habit formation; Genuine savings; Well-being improvement; Sustainable development; D11; D62; E13; Q56 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s12076-013-0107-6

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