Comprehensive investment and future well-being in the USA, 1869-2000

Citation

Greasley D, Hanley N, Kunnas J, McLaughlin E, Oxley L & Warde P (2013) Comprehensive investment and future well-being in the USA, 1869-2000. Stirling Economics Discussion Paper, 2013-06.

Abstract
This paper reports long-run tests of how comprehensive investment (CI) predicts future well-being in the USA. Theory suggests that a country with a positive level of CI should experience non-declining future utility. Despite the widespread uptake of CI, previous tests of its predictive power are for short time intervals. We assemble data for increasingly-comprehensive measures of US capital back to 1869 which are used to predict future consumption per capita. Our results show that with the inclusion of natural and human capital, CI can predict changes in future well-being reasonably well over 20 years into the future. Extending CI, to include measures of intangible or social capital, yield results that closely predict consumption over 20-50 years horizons.

Keywords
sustainable development; natural resources; intangible capital; comprehensive investment; future well-being; US economic growth

JEL codes

• E01: Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
• E21: Macroeconomics: Consumption; Saving; Wealth
• N11: Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: Pre-1913
• O11: Macroeconomic Analyses of Economic Development
• O44: Environment and Growth
• Q01: Sustainable Development