On income, sustainability and the 'microfoundations' of the Genuine Progress Indicator

This paper contains a critical assessment of the use of the Fisherian income concept to underpin the Genuine Progress Indicator (GPI) and related measures. Comparisons in the recent GPI literature between Hicksian and Fisherian concepts of income are shown to be based on a modern misreading of Hicks (as presenting a production-based measure rather than a consumption-based one), and on a particular, and early, version of Fisher's conception of income which was subject to much controversy. Where Hicks' 'central criterion' of income articulated a clear thought experiment concerning sustainability (which can only ever be crudely approximated in practice), the thought experiment underpinning Fisher's concept says nothing at all about sustainability. The 'benefits vs. costs of growth' interpretation of the GPI is argued to confuse correlation and causation. Moreover, the literature connecting Fisher's concept to the GPI ignores the emphasis in much modern work on present value measures stemming from Samuelson and Weitzman.