Sustainability and Wealth of Rural Households: Measurement and Inequality Analysis

• Published date: 01 March 2023
• Author: Soumaïla Gansonré,Ramatu M. Al‐Hassan,Idrissa M. Ouédraogo,George T. Kwadzo,Edward E. Onumah
• Date: 01 March 2023
• DOI: http://doi.org/10.1111/roiw.12572

© 2022 International Association for Research in Income and Wealth

150

SUSTAINABILITY AND WEALTH OF RURAL HOUSEHOLDS:

MEASUREMENT AND INEQUALITY ANALYSIS

by Soumaïla GanSonré*

Université Joseph Ki- Zerbo

University of Ghana

ramatu m. al- HaSSan

University of Ghana

IdrISSa m. ouédraoGo

Université Thomas Sankara

AND

GeorGe t. Kwadzo and edward e. onumaH

University of Ghana

A small but growing literature is linking well- being with the value of assets, measured comprehen-

sively. This measure, called comprehensive wealth, has appeared as a leading economic indicator of

sustainability by reflecting the potential of future well- being. Despite the concerns of sustainability

for policy interventions at the micro- level, the existing literature is limited to country- level estimations.

This paper applies the general framework of weak sustainability to measure wealth at the household

level. Using data from three rounds of household survey, market prices, and yield data from rural

Burkina Faso, we measure wealth, income, and consumption per adult. The results show that wealth

has consistently increased over time in contrast to income and consumption which have fluctuated.

Wealth is also less unequally distributed. Finally, consumption is found to be more correlated with

wealth. This suggests that wealth- based interventions are more likely to improve well- being in a sus-

tainable way.

JEL Codes: D31, Q01, Q12

Keywords: sustainability, comprehensive wealth, income and consumption, inequality, rural households,

Burkina Faso

Note: The authors are grateful to Prasada Rao and two anonymous referees for their helpful

thoughts, comments, and guidance. The authors also thank Chris Barrett, Kimseyinga Savadogo, Elisé

Ouédraogo, and Yiriyibin Bambio for facilitating the data access. Finally, the authors gratefully ac-

knowledge feedback from participants to the 2016 PhD seminar series at the Department of

Agricultural Economics and Agribusiness at the University of Ghana. Any errors are the authors’

responsibility.

*Correspondence to: Soumaïla Gansonré, Centre Universitaire de Ziniaré, Université Joseph Ki-

Zerbo, Ouagadougou, Burkina Faso (soumailagansonre@gmail.com).

Review of Income and Wealth

Series 69, Number 1, March 2023

DOI: 10.1111/roiw.12572

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Review of Income and Wealth, Series 69, Number 1, March 2023

151

© 2022 International Association for Research in Income and Wealth

1. IntroductIon

The concept of comprehensive wealth is based on the principle that a

comprehensive accounting of all forms of capitals1 is required to more accurately

understand levels and changes in human well- being, which needs to be sustained

through economic development (Pender et al., 2012; Hamilton and Naikal, 2014;

Stiglitz, 2016). Indeed, several authors have argued that despite the widespread ref-

erence to income as the indicator that accounts for differences in well- being across

nations, individuals and generations; and so used as the indicator for many policies

aiming at improving well- being, it may be misleading (Arrow et al., 2012; Hamilton

and Naikal, 2014). A simple case is when income growth is induced by a depletion or

a deterioration of the productive resource base such as selling an asset. In such a

case, the rise in current income is obtained at the expense of future income genera-

tion capacity. This contrasts with sustainability by challenging individuals’ ability to

achieve future levels of income at least as high as current levels. Similar concerns

arise when consumption is also concerned. Because development policies aim to pur-

sue sustainability, i.e., providing beneficiaries with means to pursue livelihood goals

after the policy intervention is over, relevant indicators for policy should have a tight

link with sustainability.

An extensive literature has established a tight link between wealth and sustain-

ability (Pearce and Atkinson, 1993; Arrow et al., 2012; Hamilton and Naikal, 2014;

Stiglitz, 2016; Roman and Thiry, 2016). In this literature, sustainable well- being has

been linked with non- decreasing levels of wealth, and wealth has emerged as a leading

economic indicator of well- being and social welfare (Hamilton and Naikal, 2014).

However, it is not any measure of wealth that serves the purpose of sustainability. To

adequately reflect sustainability, a measure of wealth should be comprehensive and

account for all assets from which people obtain satisfaction, whether they are mar-

ketable or not. The wealth approach to well- being, which is capitals- based, thus aims

to be comprehensive. In this perspective, well- being is reflected by the social worth of

all assets. One of the greatest challenges remains how to comprehensively measure

the stocks and the associated prices of all assets in an empirical analysis.

Much of the existing empirical literature has focused on measuring wealth

at the national level (Jarvis et al., 2011; Arrow et al., 2012; Engelbrecht, 2014;

Mumford, 2016; Engelbrecht, 2016; Managi and Kumar, 2018) or regional level

(Ikeda et al., 2017). At that level, there are broadly two approaches to measure

wealth comprehensively. The first approach, which is top- down and used by Jarvis

et al. (2011) and Lange et al. (2018), measures total wealth as the present value of

future consumption, building on theoretical economic growth models. Their esti-

mate of wealth has been criticized as focusing on the well- being of current genera-

tions. The second approach is bottom- up and proceeds by accounting for asset by

asset to measure comprehensive wealth as the sum of the values of all assets (Arrow

et al., 2012). Two major concerns, more on the empirical application, have been

raised about the bottom- up approach. The first is the inability to comprehensively

1Capital generally refers to durable assets that are considered as factors of production. While the

word capital may be used to term a set of assets, a single asset may also be referred to as capital. In this

paper, we often use these terms interchangeably to refer to the same thing. However, we prefer the term

capital, like in farm capital, when making reference to a relatively homogeneous set of assets, and assets

to refer to a more heterogeneous set, like household assets, which includes farm and non- farm assets.