December 22, 2013
IF WE ACTUALLY MEASURED WHAT WE PRODUCE WE COULDN'T WHINGE ABOUT HOW HARD WE HAVE IT:
The gross distortions of GDP (Tim Harford, 12/12/13, Financial Times)
Posted by Orrin Judd at December 22, 2013 9:14 AMGDP is problematic, and increasingly so. We seem to have no convincing measure, for example, of what contribution financial services make to the economy. In the wake of the recession, Andrew Haldane of the Bank of England pointed out that according to the UK's national accounts, this contribution grew at the fastest rate on record in the fourth quarter of 2008 - the quarter that began a fortnight after Lehman Brothers collapsed.Or consider what appears to be an opposite error. According to the economist Erik Brynjolfsson of MIT, the information sector of the economy (software, telecoms, publishing, data processing, movies, TV) has scarcely grown over the past 25 years as measured by GDP. This seems bizarre but it's easy to see the logic: GDP measures the price paid for goods and services, but many valuable digital services are free or cheap. Brynjolfsson and co-author JooHee Oh reckon that every year consumers in the US are enjoying an extra $100bn of services online they don't have to pay for.There are plenty of other knotty problems too - from how to measure the losses caused by distracting Facebook posts to how to calculate the gains from antibiotics and super-efficient lighting.