Seminario 18/04: Francisco Alcalá Agulló (Universidad de Murcia)- Growth Sustainability and the Quality Dimension of Consumption

Which are the factors affecting the long run sustainability of GDP growth? This paper discusses a potentially important one that has been disregarded so far: the shift in advanced economies from quantity to quality growth. First, the paper lays down a simple model introducing the quality dimension of consumption into the IPAT analytical framework. Second, it considers the case of cars and shows the importance of distinguishing the quantity and quality dimensions of consumption when estimating environmental impacts. The cars’ quality elasticities of material use, gas consumption, and CO2 emissions range between .3 and .6, and decrease with quality; to be compared with the unitary quantity elasticities (given a constant technology). Hence, the environmental impact of GDP growth along the quality dimension is significantly smaller than the impact of quantity growth. Policies aimed at improving consumers’ information and prolonging product durability would help the shift from quantity to quality growth.