Ecological Economics 33 2000 219 – 236
ANALYSIS
Intra-generational equity and sustainable welfare: a time series analysis for the UK and Sweden
Susanna Stymne, Tim Jackson
Centre for En6ironmental Strategy, Uni6ersity of Surrey, Guildford, Surrey, GU
2 5
XH UK Received 4 May 1999; received in revised form 14 October 1999; accepted 18 October 1999
Abstract
This paper discusses the importance of intra-generational equity to sustainable development. It outlines a number of methodologies for measuring income inequality in the economy, and presents several possible ways of incorporat-
ing the impact of distributional effects into measures of welfare in the economy. The authors highlight in particular an index developed by Atkinson Atkinson, A.B., 1970. Distributive politics and economic growth. Q. J. Econ., May,
465 – 490. based on the social welfare model. This method possesses two main advantages over other methods. Firstly, it is expressed directly in terms of social well-being. Secondly, value judgements incorporated into the measure
are made explicit through the parameter o which expresses society’s degree of aversion to income inequality. The paper calculates the value of the Atkinson index for two case study countries Sweden and the UK between 1950 and
1996 for a central estimate of o = 0.8. The results show that the welfare loss due to inequalities in the distribution of income varied between 5 and 10 for Sweden, and between 6 and 14 for the UK, with the higher values coming
towards the end of the period. The paper explores the sensitivity of these results to changes in the value of o for the case of the UK, and discusses the relevance of the work to the measurement of sustainable welfare. © 2000 Elsevier
Science B.V. All rights reserved.
Keywords
:
Equity; Sustainability; Income distribution; Income inequality; Gini coefficient; Atkinson index www.elsevier.comlocateecolecon
1. Introduction
Equity is a key concept in sustainable develop- ment. The literature on sustainable development
and on ecological economics has devoted most attention to the concept of inter-generational eq-
uity. Although well recognised in economic the- ory, the concept of intra-generational equity has
received less attention in the ecological economics literature. Nevertheless, it is clearly important to
sustainable development because there are recog- nised links between income inequality, economic
Corresponding author. E-mail
addresses
:
a.stymnesurrey.ac.uk S.
Stymne, t.jacksonsurrey.ac.uk T. Jackson
0921-800900 - see front matter © 2000 Elsevier Science B.V. All rights reserved. PII: S 0 9 2 1 - 8 0 0 9 9 9 0 0 1 4 4 - 5
growth, human capital and the environment. Thus, levels of inequality in the economy may
have considerable impact not only on present levels of well-being, but also on the well-being of
future generations.
This paper discusses those links in conceptual terms Section 2. It then outlines a number of
methods for measuring income inequalities Sec- tion 3 and discusses the question of integrating
those measures into measures of national welfare Section 4. Using two of these measures, it then
presents a time series analysis on trends in the distribution of incomes in two case study coun-
tries the UK and Sweden and carries out a sensitivity analysis for the UK on one key
parameter — the value of o in the Atkinson inequality index Section 5.
The differences between equity, equality, fair- ness and justice have been extensively discussed in
the literature e.g. Le Grand et al., 1976; Daly 1992; Dasgupta, 1995; Sen 1997. Quite clearly the
concept of intratemporal equity is broader than the concept of intratemporal income equality. A
thorough analysis of the former issue must pay attention to the intratemporal distribution of a
wide variety of resources, including natural, envi- ronmental, cultural, human and social resources
as well as purely financial ones. Acknowledging these limitations, it is nonetheless our contention
that the distribution of incomes in the economy represents a reasonable proxy with which to illus-
trate the welfare impacts of intratemporal equity, and this paper proceeds on that basis.
2. Well-being and income inequality
