Index of Sustainable Economic Welfare

The Index of Sustainable Economic Welfare (ISEW) is roughly defined by the following formula: ISEW = personal consumption+ public non-defensive expenditures- private defensive expenditures+ capital formation+ services from domestic labour- costs of environmental degradation- depreciation of natural capital GDP is misleading as an indicator or even as a proxy of the welfare of a nation, let alone as a measure of people's well-being,[2] although the makers of economic policy commonly think to the contrary.

The GPI is an extension of ISEW that stresses genuine and real progress of the society and seeks especially to monitor welfare and the ecological sustainability of the economy.

The results reveal that the increase in economic welfare of an average American has stabilised after the 1970s although the economy, measured by GDP, has continued to grow.

Besides the USA there have been at least seven other countries or regions which have compiled the ISEW, namely the UK (Jackson & Marks 1994), Germany (Diefenbacher 1994), The Netherlands (Rosenberg & Oegema 1995), Austria (Stockhammer et al. 1995), British Columbia (Gustavson & Lonergan 1994), Sweden (Jackson & Stymne 1996), Chile (Castaneda 1999), Finland (Hoffrén 2001), Poland (Gil & Śleszyński 2003), Belgium (Bleys, 2008), Flanders (Bleys & Van der Slycken, 2019) and China (Zhu et al., 2021).

In the mid-1980s income disparities started to grow again, flows of capital (investments) abroad increased and environmental hazards escalated, resulting in a decline in the weighted personal consumption.