A Review of the Literature on Regrettable Expenditures and Implications for the Index of Economic Well-being

Abstract

This report reviews the literature on regrettable expenditures — defensive spending that does not directly increase well-being — and examines the implications for the Index of Economic Well-being (IEWB). It covers methodologies for estimating the costs of commuting, crime, household pollution abatement, auto accidents, divorce, and medical expenses. The report recommends maintaining the current definition of regrettable expenditures in the IEWB, adding some new regrettable costs, and updating the methodology for calculating existing components.

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