Socioeconomic and Environmental Performance: A Composite Index and Comparative Application to the USA and China

This paper deals with an analytical framework to provide a measure of overall performance which involves both socioeconomic activities and environmental sustainability using a recent Index of well-being. The composite indicator, created by Medrano-B & Teixeira (2013), is associated with the so called “Magic Square”, a diagram stimulated by the work of Kaldor (1971). From this starting point, we introduce a set of four variables to measure their total impact on the sustainable development of regions. They are: human development index, per capita carbon dioxide, drinkable water and sanitation, and intensity of renewable energy measured as a fraction of the total generated energy. This formal approach is applied to the comparative performance of the USA and China from 2002 to 2012. As expected, environmental, socioeconomic and institutional indicators affect the level of welfare. This being the case, an important lesson to be learned is that careful regulation and policy actions, not just proposals, are required to implement a sustainable and acceptable quality of life. In this article we complete the argument by suggesting that a new paradigm is required to fulfill our desirable objectives, and get more out of our intellectual effort, capabilities and political influence