June 03, 2009

Robert Costanza and the broken window fallacy

Robert Costanza writes in Nature:
There is evidence in developed countries that economic growth beyond a certain point does not improve well-being, owing to the hidden, external costs of that growth, including climate impacts. For example, an oil spill increases gross domestic product (GDP) as someone must pay to clean it up, yet it detracts from well-being. Increased crime, sickness, war, pollution, fires, storms and pestilence are all positive for GDP because they increase economic activity.
Crime, sickness, war, pollution, fires, storms and pestilence all decrease economic activity.

Costanza also wrongly equates economic growth with GDP growth.

No comments:

Post a Comment