Components of NWI

No. +/- Component
1.   Index of Income Inequality (Gini-Index)
2. + Private consumption weighted by Index of Income Inequality
3. + Value of household work
4. + Value of voluntary work
5. + Non-defensive public expenditure on health care and education
6. +/- Net value of the costs and benefits of consumer durables
7. - Costs of travels between home and workplace
8. - Costs of traffic accidents
9. - Costs of crime
10. - Costs of alcohol, tobacco and drug abuse
11. - Social expenditure to compensate for negative environmental impacts (costs of avoidance and repair)
12. - Damage costs of water pollution
13. - Damage costs of soil degradation
14. - Damage costs of air pollution
15. - Damage costs of noise
16. +/- Value of increase/loss of ecosystems
17. +/- Value of increase/loss of agricultural areas
18. - Replacement costs due to the consumption of non-renewable energy resources
19. - Damage costs of GHG emissions
20. - Costs of the use of nuclear energy

 

Component 1 – the Gini-Index – serves as a weighting factor for component 2 (private consumption); therefore it is the only index coloured in grey. Components 6, 16, and 17 can either be positive or negative, thereby increasing or decreasing the total value of NWI.

Notes on aggregation

The NWI consists of twenty components that are aggregated in the following way:

  • component 1 – the Gini-Index – serves as a weighting factor for component 2 (private consumption)
  • The other comonents 3 to 20 will be added or subtracted from component 2; the result ist he total value of the NWI in a given year.
  • There are three components – 3, 4 and 5 – that are also positive; hence, they are added to component 2
  • Twelve components – 7 to 15 and 18 to 20 – are always negative and will be subtracted.
  • Components 6, 16, and 17 can either be positive or negative. In 2015, all of these three components had been negative, that means diminishing social welfare in Germany.