The prosperity of the State of Israel, now and in the future, rests upon the well-being of its inhabitants. This means that well-being in Israel must be sustainable.
The well-being of Israel’s current and future inhabitants depends upon their access to economic, natural, human, social, and cultural resources – the capital stocks whose preservation and cultivation are the cornerstones of a population’s continued well-being.
Promoting the well-being of Israel’s inhabitants requires monitoring its current level and that of the capital stocks needed to sustain it. In this spirit, the Israeli government, like other governments around the world, has begun measuring the well-being of its denizens.
In view of of its statutory authority “to advise the government on activities relating to research and scientific planning of national significance,” The Israel Academy of Sciences and Humanities was asked by the Israel Ministry of Environmental Protection, the Bank of Israel, the Israel Central Bureau of Statistics, and the Yad Hanadiv Foundation for its help in developing indices of sustainable well-being in the State of Israel.
The expert committee of The Israel Academy of Sciences and Humanities mapped the types of capital stocks required for current and future well-being in Israel, recommended ways to measure them, and pointed to major difficulties that are putting them at risk. The committee consulted over a hundred experts in various fields of academia, government, and civil society.
Chair: Professor Menahem Yaari
Professor Eran Feitelson
Professor Ori Heffetz
Professor Elhanan Helpman
Professor Eugene Kandel
Professor Orit Kedar
Professor Hadas Mandel
Professor Avner Offer
Professor Nathan Sussman
Coordinator: Yarden Niv
Economic capital, which encompasses physical capital, knowledge capital, and financial capital, directly and indirectly promotes the well-being of residents. It contributes to a country’s capacity to supply goods and services, both in the present and in the future, and is thus crucial to individual welfare in the most basic sense as well as in improving the standard of living. Sustainable well-being thus requires the maintenance of an adequate productive capacity, which in turn requires a suitable level of physical capital. Knowledge capital also plays a vital role in forming a country’s productive capacity, while financial capital provides flexibility to acquire other forms of capital, offering protection against adverse economic (as well as medical and other) shocks.
Indices of Economic Capital
Humankind’s existence on earth is based on natural resources, which constitute natural capital. Natural capital consists of natural resources that make human existence possible and that benefit human life and activities. As the stock of natural capital diminishes or deteriorates, opportunities to produce and consume goods and services dwindle, economic and human development are compromised, and general well-being erodes. Thus, if we are to promote sustainable well-being in Israel, we must manage, invest in, and efficiently utilize the stock of natural capital. Of particular importance in the Israeli context are land, ecosystems and the biodiversity present in them, water resources, air, mineral ores, and energy resources. Due to Israel’s small land area relative to the intensity of human activity, it is particularly important that open spaces subject to heavy pressure be protected, and that institutional systems be established to manage the stock of resources from an intergenerational perspective.
Indices of Natural Capital
Human capital comprises both the physical and mental health of individuals and the knowledge, skills, and competencies that they have acquired throughout their life – attributes that improve their welfare and well-being. The human capital of individuals also contributes to the welfare and growth of the society in which they live, for example through its major role in elevating labor productivity and creating economic capital. At the national level, population composition, migration trends, and labor market characteristics also affect society’s ability to care for its members and their quality of life. Rising levels of life expectancy and standard of living in many countries, including Israel, challenge the ability to sustain and develop human capital over time, and underscore the need to shift from a focus on general life expectancy and material standard of living to a focus on quality of life. Israel faces additional challenges concerning human capital: certain aspects of human capital, such as labor market skills and knowledge, are still far behind those of the most developed countries, and exhibit a high degree of inequality. Although Israeli residents’ health status is among the best in the world, underinvestment in the healthcare system threatens its quality. Finally, like other developed nations, Israel will be facing many challenges to its existing stock of human capital, posed by technological developments and the transition to a green economy.
Indices of Human Capital
Human beings are social creatures. In order for societies to flourish, certain resources that, over the years, have come to be known as “social capital” must be available. These resources allow one to cooperate with others, to be aided by them, to aid them in turn, and to enjoy a sense of belonging and community spirit. Social capital resources are important for people’s ability to act both within their more immediate circles of belonging, e.g., their families and local communities, and within broader circles. These resources include the social networks one has joined, one’s civic and political engagement, one’s trust in others, as well as shared values and norms. They also include resources that ensure social and political conditions for flourishing: democratic institutions, rights and liberties, and an absence of crime and corruption. The coronavirus pandemic that plunged Israel and the rest of the world into crisis this past year underscored the importance of social capital for residents’ well-being, the state’s resilience, and its ability to cope with the challenge. Technological developments, Israel’s social diversity, and demographic trends pose challenges for sustaining Israel’s social capital, challenges that must be addressed if we are to maintain and develop it.
Indices of Social Capital
Culture and identity are basic human needs; when these needs are met, well-being is enhanced. Culture is an element of the sense of identity that subgroups and individuals in society possess, and itself possesses values that bridge different identities. The substance of cultural resources may differ from place to place, between time periods, and between people, due to their positions, values, and identities. It is particularly challenging to estimate Israel’s resources in this sphere, due to the country’s great social and cultural diversity. With special regard for the Israeli context, the resource stock should generate a wide range of possibilities for cultural experience, to encourage new cultural creation and preserve those features of a heritage whose neglect could result in their loss. From a sustainable well-being perspective, public funding is crucial for the development and preservation of cultural resources.
Indices of Cultural Capital