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Air quality in welfare accounting

Published online by Cambridge University Press:  26 April 2022

Almut Balleer  and
Morten Endrikat
Almut Balleer*
Affiliation:
RWTH Aachen University, Germany Institute for International Economic Studies, Sweden, and CEPR
Morten Endrikat
Affiliation:
RWTH Aachen University, Germany
*
*Corresponding author. E-mail: balleer@ewifo.rwth-aachen.de. Phone: +49 241 8096154. Fax: +49 241 8092337.
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Abstract

We measure how taking into account air quality affects relative welfare levels and welfare convergence across countries. We use the equivalent variation framework by Jones and Klenow [(2016) American Economic Review 106(9), 2426–2457.] which takes into account consumption, life expectancy, inequality, and leisure and extend it with respect to environmental quality in form of air pollution. Our results show that omitting environmental aspects from welfare accounting might lead to both a substantial over- or understatement of actual relative welfare and welfare developments for different (groups of) countries.

Keywords

Economic welfareeconomic developmentair pollutionenvironmental economics
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 4 , June 2023 , pp. 1019 - 1058
Copyright
© The Author(s), 2022. Published by Cambridge University Press

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