Dr. Kevin J. Mumford


Mumford, K. (2012). Measuring inclusive wealth at the state level in the United States. In UNU-IHDP and UNEP. Inclusive Wealth Report 2012. Measuring progress toward sustainability. Cambridge: Cambridge University Press.

Key Messages from Chapter

This chapter is the first attempt to construct an accounting of the capital assets of each of the 48 contiguous U.S. states.

The study looks at four types of capital: exhaustible natural capital (mainly coal, oil, and natural gas); land; physical capital (like buildings, homes, and equipment); and human capital (based on education, wages, and number of working years remaining). Despite the limitations in data availability, using housing and stock market data to value physical capital is an important contribution to the literature on sustainability.

The results show a very low level of wealth inequality across states. The Gini coefficient is 0.09, which represents a fairly equal distribution of wealth.

The study demonstrates that the rate of economic growth as measured by inclusive wealth can be quite different than the rate of economic growth suggested by GDP figures. Data show that those states with high GDP growth rates tend to have much lower rates of inclusive wealth growth.

It is essential that governments collect capital stock data so that inclusive wealth accounting can become increasingly accurate, comprehensive, and useful. More complete data would enable states to measure their rate of inclusive investment. Such data would also make it clear to policy-makers whether current GDP growth rates are sustainable in the long-run.

An important conclusion drawn here is that if states with an inclusive wealth per capita annual growth rate that is less than their GDP per capita annual growth rate want to sustain higher GDP growth rates for the long term, increased inclusive investment will be required. This means that state governments would have to encourage education, reduce the extraction of natural resources, and increase the construction of public infrastructure.