Knowledge that Transforms

This paper considers some of the shortcomings of an income per I capita measure of and suggests an alternative capitalized value of expected future income per capita. Part I considers briefly some of the variables that a generally acceptable empirical welfare function should include and defines the capital value measure; Part II compares this measure of with the commonly used measure, income per capita; Part III presents and analyzes the results of computations of economic well-being for a number of United States cities, by both measures; Part IV considers some implications of a present value measure for interregional migration.

As technological developments have altered production techniques, types of mechanical equipment, and varieties of outputs, society has begun to recognize that economic progress involves not only changes in machinery but also in men – not only expenditures on equipment but also on people. Investment in people makes it possible to take advantage of technical progress as well as to continue that progress. Improvements in health make investment in education more rewarding by extending life expectancy. Investment in education expands and extends knowledge, leading to advances which raise productivity and improve health. With investment in human capital and non-human capital both contributing to economic growth and welfare and in what is probably an interdependent manner, more attention should be paid to the adequacy of the level of expenditures on people.