‘A dynamic analysis of human welfare: health, education, knowledge and the environment’

Joaquim Silvestre Benach, John Roemer.

ny human activity at a given point in time influences future welfare opportunities by way of the creation and destruction of different forms of capital. At the same time, any investment involves foregoing present consumption. While some of the returns may be realised in the generation making the investment, others are intergenerational.In this project, we intend to consider educational quality, the level of knowledge and the stock of natural capital as direct arguments of social welfare, along with the traditional flows of consumer goods, and to factor the effects on future production opportunities of investments made in the different forms of capital.

We propose a two-stage programme. In the first stage, of a positive nature, we will build and calibrate an overlapping generations model, assigning explicit roles to investment in education, knowledge and the environment. In the second, normative stage, we will calculate optimal pathways for selected flows and stocks under differing welfare criteria. Our ultimate purpose is the normative evaluation of conflicts not only between saving and spending but also between different forms of investment.