the value of $1000

[lintotja@xxxxxxxxxxxxx Sun, 03 Mar 1996 20:22:28 GMT GMT]

I'm new to this list, and thus not aware what the range of
interests of list members is. But I wonder if anyone would care
to respond to this question.

Tibor Scitovsky, in "The joyless economy", argues that the
inclusion of $1000 in the national accounts implies that (1)
someone did work, the discomfort of which was worth less than
$1000 to him or her, and (2) services were rendered worth more
than $1000 to someone else. Thus the sum of worker's and
consumer's net gains could be much less or much more than the
$1000 included in the accounts.

Is there a flaw in Scitovsky's logic, or some counter-argument?

I ask because on the face of it, this is one of the simplest and
most devastating reasons (among many others) for not regarding
GNP as a measure of welfare, or GNP growth as a legitimate target
of policy. (It would also fatally undermine attempts to construct
measures of welfare based on "improving" GNP, a la Nordhaus and
Tobin, Daly and Cobb, etc.) Yet it never seems to be mentioned by
environmentalists and other critics of growth.

John Lintott