Annals of Operations Research

, Volume 54, Issue 1, pp 203–215 | Cite as

Welfare measurement and the health environment

  • Thomas Aronsson
  • Per-Olov Johansson
  • Karl-Gustaf Löfgren


An important issue in environmental economics is to augment the conventional net national product measure so as to cover changes in stocks of natural resources. In this paper, we show how to treat health (capital) effects in welfare measures caused by, for example, pollution. We also show the effects the risk of “doomsday” caused by pollution has on these measures. A Ramsey growth model enlarged with health capital and death risks is used to derive an augmented welfare measure. A way of solving the particular technical problem one faces when the death risk depends on a state variable (health capital) is also presented. This measure is contrasted with the conventional net national product measure. We also briefly discuss the welfare properties of a market economy when individuals invest in health capital but face a strictly positive death risk.


Evaluation of national product health environment 

Subject classification

JEL C82 131 Q28 


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Copyright information

© J.C. Baltzer AG, Science Publishers 1994

Authors and Affiliations

  • Thomas Aronsson
    • 1
  • Per-Olov Johansson
    • 2
  • Karl-Gustaf Löfgren
    • 1
  1. 1.Department of EconomicsUniversity of UmeåUmeåSweden
  2. 2.Stockholm School of EconomicsStockholmSweden

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