Riders on the Storm

Abstract

This chapter explores plausible environmental effects on American well-being from a historical perceptive, using quantitative data and a methodological approach that draws from green economics. This adds an environmental dimension of welfare to Robert Gordon's interpretation of the development of well-being. First, it may be hypothesized that the levels of environmental damage rose especially during the prosperous decades following the World War II, including the spread of motor vehicles, diffusion of air traffic, and increased energy consumption. If so, the traditional way of measuring economic progress, i.e., gross domestic product, would exaggerate the true development of well-being. On the contrary, second, the true progress of the post-1970 period may have been underestimated if environmental damage actually decreased as a consequence of an environmental awakening among producers, consumers, and agents, creating modern environmental policy. However, as the cost of carbon is time dependent, we can foresee that the environmental costs will continue to increase.