I am not a fan of measuring human well-being in economic terms. It simply gives the wrong answer in too many cases, as pointed out by E.F. Schumacher. For example, medical improvements have caused an increase in debilitating and expensive chronic conditions, by curing some acute diseases that would have been fatal in the past. Should we claim that extending these lives is not a net benefit, in spite of the cost? And, should we count the very high cost of caring for those chronicly ill people as a positive contribution (as it is in the GDP calculation)? These questions avoid the real issue: there are benefits to extending life that cannot be quantified economically.



One of the worst failings of this form of economic analysis is that it does not address risk. For example, the micro-biome near the surface of the ocean produces about half of the oxygen that we breathe, and this ecosystem is very poorly understood. It is certainly possible (a risk) that ocean acidification will disturb this system, and halt the production of oxygen. What value should we place on half of the oxygen in our atmosphere? (Talk about inelastic markets!) How do we assign a probability to the unknown risk that our disturbance (acidification) will shut down photosynthesis? And, even if we could do that, how do we place a value on the resulting lottery?