Inclusive Wealth Index Research Articles

An evaluation of inclusive capital stock for urban planning

Rapid urbanization has caused significant problems, and sustainable city design can play an important role in solving these problems under limited budgets and resources. Previous studies have proposed city evaluation indicators that can suggest appropriate urban designs. However, these indicators do not clearly consider economic theory, which is crucial for understanding accumulation of urban capital stock by the flows from daily urban activities. This study proposes a research framework based on economic theory for evaluating urban sustainability; this framework uses the inclusive wealth index (IWI) concept to examine inclusive urban capital stock. It examines the advantages of using the IWI as a city evaluation indicator along with data envelopment analysis and a decomposition analysis framework. We use data for 20 Japanese ordinance‐designated cities for an empirical study to demonstrate a proposed approach for evaluating inclusive urban capital. The developed research application evaluates each city's relative superiority in terms of capital accumulation and identifies those factors determining changes in capital flows via changes in efficiency, priority, and scale. The combination of these results can be helpful to decision makers seeking to increase urban capital by considering reference city information and relative superiority.

The inclusive wealth index. A critical appraisal

Among recent high-profile propositions to revise national accounts and to provide new indicators of sustainability and well-being, the inclusive wealth framework and the related inclusive wealth index (IWI) undoubtedly stand out as one of the most promising endeavours. Built up at the confluence of welfare, development and sustainability economics, the indicator has been designed to bring information about the wealth of nations and their sustainability, in a comprehensive way. The inclusive wealth framework is nevertheless fraught with limitations, due to questionable theoretical assumptions, gaps in data availability, unrealistic assumptions about the future and inability to account for distributional issues. We propose a non-exhaustive critical appraisal of the index and its underlying framework. We conclude that these limitations undermine its capacity to fulfil the requirements of a satisfactory sustainability indicator. We argue that most problems lie in the substantial discrepancy between the inclusive ambition of the indicator and the scarce means to implement it. Whereas the interconnectedness of the various assets that constitute wealth as well as their complex evolution through time are acknowledged by the proponents of inclusive wealth, the way the IWI is computed is rather a mere addition of layers of actuarial-like monetary values for a (not inclusive yet) range of capital assets. Caution is thus warranted while using such an approach, and shorter-range alternatives to pursue similar goals are proposed.