A utilitarian approach to economic growth
Adhami et al., in this paper, propose using a total utilitarian approach to measure economic growth, which incorporates both population growth and per capita consumption growth, rather than just focusing on per capita measures. They develop a consumption-equivalent (CE) welfare growth metric that weights population growth by the value of a life-year relative to consumption (v(c)). The authors highlight how a total utilitarian perspective can lead to very different assessments of economic progress compared to standard per capita measures. They find that:
- CE welfare growth around the world averages over 6% per year since 1960, compared to only 2% per year for per capita consumption growth.
- Population growth accounts for about 66% of CE welfare growth on average across countries (51% when weighting countries by population).
- This method significantly changes growth rankings of countries:
– Countries with high population growth like Mexico and South Africa rise sharply in the rankings.
– Countries with slow population growth like China, Germany, and Japan fall significantly in the rankings. - The results are robust to incorporating inequality, adjusting for migration, and including parental utility from children using time use data from several countries.
- The authors find that effects of falling parental utility from having fewer kids is roughly offset by increases in the “quality” of kids associated with rising parental time investments per child..
- Even with very conservative parameters, population growth still contributes substantially to overall welfare growth in most countries.
The authors emphasize that they are not making policy recommendations, but rather illustrating how much incorporating population growth matters quantitatively when measuring social welfare from a total utilitarian standpoint.
Population and Welfare: The Greatest Good for the Greatest Number
Authors: Mohamad Adhami, Mark Bils, Charles I. Jones, Peter J. Klenow
From: Stanford University, University of Rochester
The human development index (HDI)
The 2023/2024 Human Development Report published by the UN highlights several key issues affecting global human development:
- Unprecedented drop in 2020-2021: The global HDI value fell for the first time ever in both 2020 and 2021, largely due to the impacts of the COVID-19 pandemic.
- Uneven and incomplete recovery: While the global HDI value is projected to recover and reach a new high in 2023, the recovery has been highly unequal across countries. For example: All OECD countries are projected to have fully recovered or surpassed their 2019 HDI values. However, 51% of the poorest countries (Least Developed Countries) are not projected to recover to their 2019 levels.
- Widening inequality: There has been a rebound in between-country inequality in human development since 2019, interrupting two decades of convergence. The gap between very high HDI and low HDI countries is increasing.
- Permanent shift downwards: The global HDI value is now projected to evolve below its pre-2019 trend, suggesting a permanent downward shift in the HDI trajectory.
- Multiple compounding crises: The decline reflects irrecoverable losses from the pandemic, including around 15 million deaths, as well as impacts from climate change, conflicts, and economic shocks.
- Setbacks across HDI components: There have been declines or stagnation in key areas like:
– Life expectancy
– Education outcomes (e.g. sharp declines in PISA scores)
– Income levels in many countries - Mismanaged interdependence: The report argues that mismanagement of global interdependence, as seen in the inadequate response to the pandemic and slow progress on climate change, has harmed human development.
In summary, the unprecedented HDI decline reflects both the acute shocks of recent crises and more systemic challenges in managing global interdependence to advance human development equitably. The uneven recovery risks entrenching a permanent divergence between countries.
Human Development Report 2023/2024
By: The United Nations Development Programme
