Do Uncertainties Affect the <scp>SDI</scp> and <scp>SDG</scp> Index Differently? Correcting Conceptual Misuse Through Evidence From <scp>G7</scp> Economies

ABSTRACT Accurately assessing sustainability performance has become increasingly important as global uncertainties intensify and advanced economies confront mounting ecological, institutional, and economic pressures. Yet empirical research frequently treats the sustainable development index (SDI) and the sustainable development goals index (SDGI) as interchangeable measures, despite their fundamentally different conceptual foundations. SDI reflects an ecological‐adjusted model of human development, capturing biophysical limits and ecological overshoot, whereas SDGI evaluates progress toward the 17 SDGs across institutional, social, economic, and environmental dimensions. This conceptual conflation raises critical empirical questions: Do uncertainty shocks affect these indices in the same way, and can findings based on one indicator be reliably generalized to the other? This study provides the first systematic assessment of whether economic, institutional, and environmental uncertainties exert differential effects on SDI and SDGI across G7 economies from 2000 to 2022. Using second‐generation econometric techniques—including cross‐sectionally augmented ARDL (CS‐ARDL), Banerjee–Carrion cointegration analysis, and CCEMG robustness estimators—the study accounts for cross‐sectional dependence, heterogeneous dynamics, and global spillovers that characterize advanced integrated economies. The results reveal clear divergence: SDI is significantly more sensitive to environmental uncertainty, reflecting its ecological foundation, whereas SDGI responds more strongly to institutional stability, clean energy transitions, and innovation dynamics. These findings confirm that SDI and SDGI capture distinct sustainability pathways and should not be used interchangeably in empirical work. By correcting a persistent conceptual misuse, the study strengthens the analytical integrity of sustainability measurement and provides clearer guidance for policy design in high‐income economies facing rising global uncertainty.