The Linearized Hamiltonian as Comprehensive NDP.

For guidance in determining which items should be included in comprehensive NDP and how they should be included, reference is often made to the libearized Hamiltonian from an optimal growth problem. This note shows how the heuristic linearized-Hamiltonian argumentcan be given a rigorous welfare justification in terms of a money-metric utility function that is "naturally normalized" to be conformable with concumption at the time of measurement. The implied normalization is of the same type as is required to interpret the "area under the demand curve" as a constant-dollar-denominated true measure of concumer's surplus. The concept of the "sustainability-equivalence principle" is explained, and it is indicated why this principle is of basic importance for the theory of national income accounting.