Inclusive wealth per capita, 1990-2008, under dynamic average utilitarianism

What is it about?

Capital assets per capita are typically measured by simply dividing capital by the current population (average utilitarianism). To consider well-being in per capita terms that extends to the future generation, Dasgupta (2001) came up with dynamic average utilitarianism, which looks at net present value of utility divided by net present value of total population from the current to future generations. Capital assets divided by the current population and those divided by this dynamic total population should move in the same direction only under strong assumptions. Thus, we showed for the first time the manner in which these two criteria show different paths of wealth per capita, and applied theory to wealth per capita for 20 selected countries, 1990-2008.

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Why is it important?

Capital assets (produced, human, and natural capital) per capita, or inclusive wealth per capita, are increasingly used as a proxy for sustainable development, as they represent productive base accessed by current and future generations. However, to reach wealth per capita, we often forget about how many future generations we have in the future. Wealth per capita in terms of dynamic average utilitarianism truly enables us to ponder per capita figures inclusive of future generations. This is indeed relevant for sustainability analysis and population ethics.