How Should We Measure Wealth? The Divergence of Dominant Wealth-Based Sustainability Metrics

There has been widespread debate about whether the way in which we measure economic activity is fit for purpose in the twenty-first century. An aspect of this debate is to move away from measuring a nation’s income (GDP) towards monitoring a nation’s assets (their inclusive wealth), as a better indicator of sustainable economic development.

Nick and Eoin's recent work provides the first critical comparison of the approaches of leading international organisations, the World Bank and the United Nations Environment Programme, to estimating changes in wealth. The paper reveals important inconsistencies in how these organisations measure sustainability and the conflicting messages that policy makers receive, despite a common underlying conceptual framework linking changes in a nation’s wealth to future well-being. At the most extreme, countries that perform the worst according to the UN are shown to perform well according to the World Bank. This confusion in signals makes better policy making more difficult.

Nick Hanley is professor of environmental and one health economics at University of Glasgow . He previously held chairs at the universities of Stirling, Edinburgh and St Andrews

Eoin McLaughlin is a professor of economics at Heriot-Watt