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Davidson Economist Argues in New Book That Economic Growth Must Consider Sustainability

by Bill Giduz
Boo and Peter Hess
Boo and Peter Hess are pictured with some of the female residents of Nepal Orphans Home.

Davidson College economist Peter Hess sees plenty of reasons for concern. One fifth of the human race lives in extreme poverty, significant population growth continues in poor countries and there are signs of environmental deterioration on every continent. In his latest textbook, Economic Growth and Sustainable Development, Hess contrasts the historical success of policies of economic growth with insufficient consideration of the consequences for sustainable development.

Hess, the Gail M. and Ernest G. Doe Professor of Economics, has taught at Davidson since 1980 and written four previous economic textbooks. However, this latest offering is by far his most personal.

Hess makes the case for the importance of sustainable development not only based on theory and evidence, but also based on his heart-felt concern for children who live in less developed countries, especially those of Nepal Orphans Home.

Hess serves as president of the board of this non-profit organization founded by his brother, Michael, in 2005. Nepal Orphans Home (NOH) attends to the welfare of children in Nepal who are orphaned, abandoned or not supported by their parents. NOH provides for the children's basic needs of food, shelter, clothing, education and health care. It also attends to their emotional needs with love and compassion, allowing them to grow up in a nurturing environment and realize their potential.

NOH currently cares for 135 children who live in five group homes in a suburb of Kathmandu, supported by professional staff and a $300,000 annual budget funded by donors and the net income from its affiliate, Volunteer Nepal.

In each of the past three years, more than 100 volunteers from across the world, including several Davidson students, have served NOH through Volunteer Nepal, providing services to the poor and disadvantaged in Nepal.

The volunteers include about a dozen members of the extended Hess family. Peter's wife, Boo, has been secretary/treasurer of NOH also since the beginning, and others in the family help with fundraising and visit on volunteer missions.

Economic Growth and Sustainable Development
Front cover of "Economic Growth and Sustainable Development."

Peter and Boo Hess have spent five extended periods of time at NOH during the summer academic vacations. Management and fundraising also require a lot of attention during the school year. Still, Hess said, "Boo and I get a lot more out of this than we give. Seeing the children grow and develop in a happy family, and realizing the difference it has made in their lives, is tremendously rewarding."

Hess dedicated Economic Growth and Sustainable Development to members of his family and the children of NOH. The book argues that investment in children and their welfare is a key to sustainable development. Hess said, "In a poor country like Nepal it's easy to see the importance of good nutrition, safe housing, education and a loving, nurturing environment for children in the success of the country."

He continued, "No subject deserves our attention more than sustainable global development. We've got to find a way to fulfill basic human needs for everyone, while effectively stewarding our common resources and the environment."

This book, developed from a class he created and has taught annually since 2004, is one of the first undergraduate texts to address comprehensively both economic growth and sustainable development. One reviewer notes, "(Hess) acknowledges the importance of integrating sustainability in the economics curriculum and recognizes explicitly that growth should be analysed as an instrument toward the achievement of higher-level goals rather than be perceived as a goal in itself (as is too often assumed in conventional economic policy)."

Economic growth, defined as an increase in national output per capita, makes possible an improved material standard of living. Sustainable development addresses the utilization of natural resources, the state of the environment and intergenerational equity. It calls for meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.

While Economic Growth and Sustainable Development is primarily an undergraduate textbook, its blending of theory and evidence to inform policy should also appeal to scholars and policy makers in international development. Nor is the book directed solely at economics students. The content and coverage are multidisciplinary, and should be of interest to students in political science, environmental science, sociology, history and philosophy.

Hess also draws on many fields for the book, including microeconomics and macroeconomics, economic development, international economics, econometrics, economic history and demography.

The book presents innovations such as an aggregate demand/aggregate supply model that can account for the lack of deflation during a recession. It also presents an extension of the basic neoclassical growth model to incorporate natural resources, the introduction of an index of youth investment to capture an important dimension of sustainable development, and the incorporation of social reference standards into the basic utility maximization model.

He presents both controversies and consensus, and acknowledges that achieving sustainable development will require informed judgments and sound policies guided by science, enlightened by lessons from the past, and carried forth with good will. "That's not an easy task, but it's absolutely essential for our future," he said.

Hess says the United States must take the lead in sustainable development. "The U.S. will have to lead in any serious effort to address climate change and generate sustainable development," he said. "For too long, our nation has consumed beyond its means. The future will not likely sustain the high levels of consumption found in the United States and other wealthy nations at the expense of populations in less developed countries."

The final chapter addresses the challenges in attaining sustainable development. "Success will require international cooperation in alleviating poverty, in supporting measures both to mitigate and adapt to climate change, and to continue the research and development into environmentally sustainable technologies," he writes.

"Technology is an important part of the solution, but technology itself isn't going to save the day," Hess asserts. "There has to be a shift in attitudes – as the environmental economist Herman Daly put it, – from 'more is better' to 'enough is best.'"

He concludes, "Hardest of all – but arguably the most important for achieving sustainable development in the world – will be this fundamental evolution in human behavior, reflected in a shift from materialism to conservation, respect for the natural environment, and greater concern for the welfare of the less fortunate."

Hess recognizes that his belief is sustainability is not shared by all. The argument that economic growth cannot continue in a finite world, that economic systems based on consumerism and relativism are unsustainable, and that the rich nations have an obligation to pare back their high levels of consumption and resource use is not universally appreciated.

But his scholarly study of economic history, the warning signs of trouble ahead, and his dedication to helping the children at Nepal Orphans Home live full and meaningful lives all motivate Hess to proclaim that following the difficult path toward sustainability is the only way to go.

A graduate of Bowdoin College, Hess received his doctorate in economics from the University of North Carolina at Chapel Hill. He has received three major teaching awards at Davidson – The Omicron Delta Kappa Teaching Award (1985), the Hunter-Hamilton Love of Teaching Award (2001), and the Student Government Association Pre-Major Advising Award (2011).

In addition to Economic Growth and Sustainable Development, he wrote an undergraduate text on mathematical economics, and he co-authored undergraduate texts on economic principles and economic development with his economics department colleague Clark Ross. Hess also has published articles on fertility transition, military spending in developing economies and sustainable development.

For more information contact Bill Giduz, Director of Media Relations, at 704-894-2244 or bigiduz@davidson.edu.