beyond gdp the quest for a measure of social welfare this paper critically examines the various approaches to the measurement of individual well being and social welfare that have been considered for the construction of alternatives to gdp special attention is devoted to recent developments in the analysis of sustainability in the study of happiness in the theory of social choice and fair allocation and in the capability approach it is suggested in the conclusion that although convergence toward a consensual approach is not impossible for the moment not one but three alternatives to gdp are worth developing jel i31 e23 e01

optimal discretionary monetary policy in a model of asymmetric central bank preferences this paper considers optimal monetary policy in the context of the central bank adopting an asymmetric objective function our results show that under asymmetric preferences many of the extant results on the time consistency problem need no longer hold

on measuring the quality of life abstract it is widely recognized that per capita income is not an adequate indicator of aggregate well being it has thus become customary to use a range of socioeconomic indices for assessing the quality of life in a society in this article we extend measures of general well being in current use by including ordinal indices of political and civil liberties and we provide a ranking of the world s poorest countries on the basis of the borda rule we then compare improvements in socioeconomic performance with the availability of political and civil liberties during the decade of the 1970s and observe that improvements in per capita national income life expectancy at birth and infant mortality are positively correlated with the extent of political and civil liberties enjoyed by citizens while improvements in literacy are negatively correlated with these liberties

social indicators and comparisons of living standards abstract construction of an international index of standards of living incorporating social indicators and economic output typically involves scaling and weighting procedures that lack welfare economic foundations revealed preference axioms can be used to make quality of life comparisons if we can estimate the representative household s production technology for the social indicators this method is applied to comparisons of gross domestic product gdp and life expectancy for 58 countries neither gdp rankings nor the rankings of the human development index hdi are consistent with the partial ordering of revealed preference a method of constructing a utility consistent index incorporating both consumption and life expectancy is suggested

a human development index by income groups summary one of the most frequent critiques of the hdi is that it does not take into account inequality within countries we suggest a methodology which allows to compute the three components and the overall hdi for quintiles of the income distribution this allows comparisons of the level in human development of the poor and non poor within and across countries an empirical illustration shows large discrepancies in human development within the countries especially in africa these discrepancies are lower the higher the hdi is but only weakly so inequality in income is generally higher than inequality in education and life expectancy

the inflation bias when the central bank targets the natural rate of unemployment abstract this paper studies the proposition that an inflation bias can arise in a setup where a central banker with asymmetric preferences targets the natural unemployment rate preferences are asymmetric in the sense that positive unemployment deviations from the natural rate are weighted more or less severely than negative deviations in the central banker s loss function the bias is proportional to the conditional variance of unemployment the time series predictions of the model are evaluated using data from g7 countries econometric estimates support the prediction that the conditional variance of unemployment and the rate of inflation are positively related

the human development index yet another redundant composite development indicator abstract in its human development report 1990 the united nations development program undp proposes yet another composite indicator of development levels the human development index hdi the hdi assesses intercountry development levels on the basis of three so called deprivation indicators life expectancy adult literacy and the logarithm of purchasing power adjusted per capita gdp using simple statistical analysis this paper questions both the composition of the hdi and its usefulness as a new index of development it concludes that the hdi is both flawed in its composition and like a number of its predecessors fails to provide insights into intercountry development level comparisons which preexisting indicators including gnp per capita alone cannot

human development concepts and measurement abstract the human development report hdr of the undp argues for a new approach to the definition measurement and achievement of development this paper traces the intellectual origins of the hdr in the recent literature on poverty entitlements and capability the paper also deals in particular with the human development index hdi and explains its rationale and its future revisions

a modified human development index abstract this paper discusses a modified index for measuring human development the suggested index is based on the components of the human development index hdi developed by the united nations development programme undp since 1990 it discusses two categories of technical issues related to the hdi for 1995 those related to the components and those relevant to the structure of the index the data from the human development report 1995 for 174 countries are used to test the robustness of the suggested index and the results are compared to those of the hdi the new index is then used to delineate with some justification different groups of countries at various levels of human development

optimal monetary policy revisited does considering us real time data change things croushore 2011 and others have noted that monetary policy may be sensitive to inconsistencies between real time data available to policy makers when making their decisions and revised data which more accurately measureeconomic performance this paper extends the asymmetric preferencemodel suggested by ruge murcia 2003 in order to focus on these inconsistencies which arise because of the long lag between the real time data release and the revised data release we focus on two related monetary policy models in both models the central banker targets a weighted average of revised and real time inflation the models differ by what the second variable is in the monetary objective function with the first model using a weighted average of revised and real time output whereas the second model uses a weighted average of revised and real time unemployment our models identify several new potential sources of inflation bias due to data revisions in addition to the ones previously suggested in the literature our empirical results suggest that the federal reserve bank mainly focuses on targeting revised data for all three variables but it does weigh real time data too as a consequence the inflation bias induced by real time data increases by 12 6 basis points on average but this figure becomes roughly twice as large at the start of recessions

optimal monetary policy with asymmetric preferences for output abstract we extend ruge murcia 2003 2004 to weigh inflation and output and show that empirical evidence supports an asymmetric preference hypothesis for output we also find evidence that the monetary authority targets potential output in parallel to barro and gordon 1983

improving human development a long run view abstract the pessimistic flavour of the human development reports appears to be in contradiction with their own numbers as developing countries fare comparatively better in human development than in per capita gdp terms this paper attempts to bridge this gap by providing a new improved human development index ihdi informed by welfare economics the ihdi is presented here alongside the united nations development programme s undp hdi for the world and its main regions since the late 19th century social dimensions in the ihdi are derived following kakwani journal of development economics 41 1993 pp 307 336 with a convex achievement function whereas a geometric average is employed to combine its dimensions longevity knowledge and income thus the ihdi does not conceal the gap between rich and poor countries and casts a much less optimistic view than the conventional undp index while it fits with the undp concern for international differences the paper s findings highlight main weaknesses in human development dimensions of present day developing countries

survey of social and economic growth in se europe a new conceptual frame for sustainability metrics the practice so far has indicated that there is a sensitive relationship that exists between social and economic subsystem of sustainable development therefore this research suggests comparison of the states of these two subsystems as a new conceptual frame which is essential for strategic conceptualization of development the research pointed out a rather visible collision between the achieved degree of economic and social development in the countries of south eastern europe in respect to germany and france which were taken into consideration as two of the most developed countries in the european union and in the entire world the indicators which are given in this research point to the necessity of further scientific and practical consideration of strategic conceptualization of relationship between economics and society

human development revisited a new undp report abstract the undp s first annual human development report is reviewed and discussed the report introduces a new index the human development index hdi as a counter to measures of national income such as gdp measuring development of countries with the aid of this index gives a significantly different ordering to one based on gnp per capita this point is not disputed although success on the index is not a necessary and sufficient condition for success in terms of rapid economic growth as is shown by the case of sri lanka nevertheless the report is welcome for its attention to human development issues for its useful statistical annex and for its observation that the poverty of the people of the developing world has been no barrier to the affluence of their armies

the human development index a critical review since 1990 the united nations development programme undp has published a series of annual human development reports hdrs in which the human development index hdi is computed for each country this index has become an important alternative to the traditional unidimensional measure of development i e the gross domestic product although the index still fails to include any ecological considerations it has broadened the discussion surrounding the evaluation of development unfortunately over the years the hdrs seem to have become stagnant repeating the same rhetoric without necessarily increasing the hdi s utility this paper evaluates how well these reports have lived up to their own conceptual mandate and assesses the ability of the hdi to further the development debate we find that the reports have lost touch with their original vision and the index fails to capture the essence of the world it seeks to portray in addition the index focuses almost exclusively on national performance and ranking but does not pay much attention to development from a global perspective we propose the incorporation of three simple modifications for the index as a first step to overcome these shortcomings 1998 elsevier science b v all rights reserved

good and bad growth the human development reports abstract the 1996 human development report undp 1996 is about economic growth and human development in keeping with past reports in the series it emphasizes the diversity of country performance in improving human development indicators at given rates of growth this article reviews what the human development reports have said on this topic looking at how well the main messages have been supported by data and analysis and how compelling they are as a basis for public action

how does the border affect productivity evidence from american and canadian manufacturing industries abstract this study reports on how much productivity fluctuations are industry specific versus country specific for the manufacturing industries in canada and the united states the correlation between cross border pairings of the same industry are found to be more often highly correlated than previously thought furthermore the study confirms earlier findings that the similarity of input use can help describe the comovement of productivity fluctuations across industries

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

a brief review of some problems in using national accounts data in level of output comparisons and growth studies abstract after an initial burst of enthusiasm for establishing their national accounts 30 or 40 years ago some countries have made continuous improvements while others have done little to maintain even their initial system presently most developing countries make their basic estimate of gdp from the production side and most do not have adequate surveys to permit a consistency check of their production and expenditure side estimates the base surveys for expenditures and production are typically over ten years old and the lags in basic surveys for constructing constant price estimates are frequently longer a number of countries estimate their growth from a weighted average of volume indexes and make no attempt at direct deflation many of those that do deflate their current expenditure estimates do so at a very aggregate level users of national accounts should be aware of the varying quality of the estimates across countries and hopefully continual questioning of the numbers will help to encourage improvement

the inequality adjusted human development index a constructive proposal abstract this paper proposes a method to incorporate a concern for distributional inequalities of income education and longevity into the framework of the human development index hdi as it is presently designed by the united nations development programme the paper constructs gini coefficients for a set of 20 developing countries measuring inequalities in annual income educational attainment and life span attainment these calculations are combined with data from the hdi to produce an inequality adjusted human development index iahdi the implications of this proposed index for evaluating and promoting development are considered

composite indices of physical quality of life basic needs fulfilment and income a principal component representation abstract in the context of international comparisons the multivariate method of principal components is suggested for computing composite indices of economic development that capture per capita income basic needs fulfilment and other possible indicators of well being the method is conceptually appealing easy to apply and seems promising in several directions two illustrative applications are given one develops a composite index based on the three pqli constituents and per capita gnp for 147 countries in the other a composite index of basic needs fulfilment is first computed for 82 countries and then a more inclusive measure that also takes account of per capita gnp is derived

poverty human development and growth an emerging consensus this paper considers several issues relevant to the debate on the extent to which poverty or development progress in general should be measured by income or by a broader set of objectives issues covered here are practical implications of the two approaches for poverty reduction efforts the impact of growth on basic social indicators and how national achievement on social indicators is best measured sri lanka and pakistan countries often cited in this debate are used as examples

the fed s monetary policy rule and u s inflation the case of asymmetric preferences abstract this paper investigates the empirical relevance of a new framework for monetary policy analysis in which the decision makers are allowed but not required to weight differently positive and negative deviations of inflation and output from the target values the estimates of the central bank s euler equation indicate that the preferences of the fed had been asymmetric only before 1979 with the interest rate response to output contractions being larger than the response to output expansions of the same magnitude we show that this asymmetry on output implied an average inflation bias around 1 5 while the implicit inflation target also declined the asymmetric preferences induced inflation bias appears to account for a sizable fraction of the historical decline in the inflation mean

performance in living standards abstract our ultimate objective is to enhance the standard of living of our societies but the standard of living has different meanings for different people a thorough investigation of the concept of the standard of living has been made only recently by sen who defines it in terms of functioning and capabilities functioning is an achievement whereas capability is the ability to achieve the main objective of the present paper is to compare achievements levels and improvement changes in the standard of living across countries using an axiomatic approach an achievement index is derived which accomodates the view that a further increase in the standard of living of a country when it is already at a higher level signifies an achievement greater than that of another with an equal increase but from a lower base the paper also tests for the statistical relationship between indicators of the countries standards of living so derived in their capita gdp the question posed is whether the aggregate income which provides people with the means to achieve a better life can be used as proxy measure of the standard living and extent to which the country s improvement in the standard of living can be explained by the levels and changes in the per capita income the analysis presented in the paper is based on the data from 80 developing countries

editorial human capital and human capability i would like to comment on the connection as well as contrast between two distinct but related areas of investigation in understanding the processes of economic and social development the accumulation of human capital and the expansion of human capability the former concentrates on the agency of human beings through skill and knowledge as well as effort in augmenting production possibilities the latter focuses on the ability of human beings to lead lives they have reason to value and to enhance the substantive choices they have the two perspectives cannot but be related since both are concerned with the role of human beings and in particular with the actual abilities that they achieve and acquire given her personal characteristics social background economic circumstances etc a person has the ability to do or be certain things that she has reason to value the reason for valuation can be direct the functioning involved may directly enrich her life such as being well nourished or being healthy or indirect the functioning involved may contribute to further production or command a price in the market the human capital perspective can in principle be defined very broadly to cover both types of valuation but it is typically defined by convention primarily in terms of indirect value human qualities that can be employed as capital in production in the way physical capital is in this sense the narrower view of human capital approach fits into the more inclusive perspective of human capability which can cover both direct and indirect consequences of human abilities consider an example if education makes a person more efficient in commodity production then this is clearly an enhancement of human capital this can add to the value of production in the economy and also to the income of the person who has been educated but even with the same level of income a person may benefit from education in reading communicating arguing in being able to choose in a more informed way in being taken more seriously by others and so on the benefits of education thus exceeds its role as human capital in commodity production the broader human capability perspective would record and value these additional roles the two perspectives are thus closely related but distinct the significant transformation that has occurred in recent years in giving greater recognition to the role of human capital is helpful for understanding the relevance of the capability perspective if a person can become more productive in making commodities through better education better health and so on it is not unnatural to expect that she can also directly achieve more and have the freedom to achieve more in leading her life both perspectives put humanity at the center of attention altogether this involves to a great extent a return to an integrated approach to economic and social development championed particularly by adam smith both in the wealth of nations and in the theory of moral sentiments in analysing the determination of production possibilities smith emphasized the role education as well as division of labor learning by doing and skill formation the development of human capability in leading a worthwhile life as well as in being more productive is quite central to smith s analysis of the wealth of nations indeed adam smith s belief in the power of education and learning was peculiarly strong regarding the debate that continues today on the respective roles of nature and nurture smith was an uncompromising nurturist and this fitted in with his massive confidence in the improvability of human capabilities

differences in relative prices and international differences in growth rates the new growth literature following paul m romer 1986 and robert e lucas jr 1988 has formulated models in which growth rates can differ systematically across countries a large empirical literature has used cross sectional techniques to examine the cause of international differences in growth rates this paper examines whether this work has used data which have been constructed in such a way as to introduce inadvertently a spurious correlation between growth and income levels this effect occurs because relative prices evolve because of different rates of technological progress in different industries many of the new growth models assume single goods or goods produced by the same technology so this phenomenon has so far escaped analysis if technological progress is more rapid in some sectors than others relative prices will change during the process of development the change of relative prices has two effects on measured growth rates first the choice of base prices affects the growth rate this phenomenon is sometimes called the gerschenkron effect second using any base prices or weights introduces a spurious correlation between income and growth less developed countries would tend to have lower growth rates not because they grew more slowly but because of data construction techniques for the sake of simplicity these phenomena will be called the gerschenkron or the level effect and the spurious correlation effect 3 this paper examines the international comparison program icp and the penn world tables pwt which are based on the icp the penn world tables are the data most widely used in empirical studies of international differences in economic growth both the icp and pwt use international prices to adjust for differences in the purchasing power of currencies these prices most closely resemble hungarian prices using such prices tends to produce time series with lower growth rates than those in the national accounts for countries less developed than hungary conversely the growth rates would be higher for countries more developed than hungary however the growth rates of poorer countries are not systematically lower in the penn world tables the paper examines why the growth rates are not distorted and makes some specific recommendations for data construction and use virginia polytechnic institute and state university blacksburg va 24061 0316 part of this work was supported by a grant from the institute of international studies at brown university and by a summer internship at the division of international finance at the federal reserve board i am grateful to peter garber david weil oded galor and anonymous referees for helpful comments alan heston and robert summers have also helped me understand icp and pwt methodology of course i alone am responsible for any mistakes in this paper iexamples include steve dowrick and duc tho nguyen 1989 robert j barro 1991 j bradford de long and lawrence h summers 1991 and n gregory mankiw et al 1992 2a series of papers by christina d romer 1986a b 1989 has already emphasized the importance of data construction techniques in another context 3there is a third effect a real acceleration effect caused by shifting consumption patterns and the reallocation of resources between sectors growth accountants such as angus maddison 1987 adjust estimates of total factor productivity for this sort of shift william j baumol et al 1989 have also referred to this phenomenon for an analysis in terms of a simple multisector solow model see nuxoll 1992a

inequality among world citizens 1820 1992 this paper investigates the distribution of well being among world citizens during the last two centuries the estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to world war ii and after that seems to have stabilized or to have grown more slowly in the early 19th century most inequality was due to differences within countries later it was due to differences between countries inequality in longevity also increased during the 19th century but then was reversed in the second half of the 20th century perhaps mitigating the failure of income inequality to improve in the last decades jel d31 f0 n0 o0