Index of Sustainable Economic Welfare

The Index of Sustainable Economic Welfare ( ISEW ) (in German about index for sustainable economic prosperity ) is an economic indicator with the aim of the classic gross domestic product to supplement or replace (GDP). The ISEW was developed for Genuine Progress Indicator (GPI ).

Calculations

Rather than simply summarize all the expenses incurred, as in the preparation of GDP, ISEW integrated the additional factors and indicators of private consumption (price adjusted in real terms ), with the aim GDP statements about the overall prosperity (usually subtractive) to correct. These include:

• Income distribution (depending unequal the distribution, the lower the increase in total wealth )
• Unpaid domestic and family work
• Public expenditure on health
• Education
• Air pollution and global pollution
• Decline of resources
• Costs of global warming

Calculations of the ISEW show that in countries often stagnated ISEW with unabated economic growth or has even declined. This development indicates that the realized growth is not sustainable and wealth is increasingly unequally distributed.

History

The index is based on the ideas of William Nordhaus and James Tobin and their Measure of Economic Welfare ( MEW ). It was introduced in 1989 by Herman E. Daly and John B. Cobb. Later, the two other cost factors added added to its definition of ISEW, which led to the development of the GPI.