I’m not sure whether it’s that hard to game GDP, but I am sure that it just measures the money economy. If people need to spend more on repairing damage, or on something which is useless for them, then the GDP goes up just as if they were getting more of what they want.
Example of wheel-spinning: tax law becomes more complex. People need to spend more on help with their taxes, and possibly work longer hours to afford it. More economic activity, bur are their lives better?
You are correct, that not all activity recorded in GDP is welfare-enhancing. (Note that GDP also underreports some positive welfare activities.)
But that’s not the important point. The important point is: does the difference between the GDP measure, and some more accurate measure, have any implications for economic policy? The answer seems to be no: attempts have been made to define more precise welfare-tracking measures of national welfare, and the result seems to be that they track GDP very closely, and that there is basically no implication for policy decisions.
(Perhaps try an analogy? To oversimplify, in dermatology there are millions of different infections you might get on your skin, but roughly speaking only a small handful of possible treatments. A good doctor doesn’t attempt expensive diagnostics to figure out exactly what you have; the proper medical treatment is only to distinguish what general class of infection you have, so that the correct treatment can be applied from the small possibilities. Similarly, GDP is easy to measure, and results in pretty much the correct policy suggestions. Anecdotes of how it is not perfect, are only important in so far as they would imply different policy choices, when they usually don’t.)
That’s a fair point. I haven’t studied proposed alternative measures.
I like using immigration and emigration as rough measures for comparing how good places are to live, with an allowance for willingness to risk dying to move.
Have the immigration and emigration stats ever been out of sync with GDP?
I’m not sure whether it’s that hard to game GDP, but I am sure that it just measures the money economy. If people need to spend more on repairing damage, or on something which is useless for them, then the GDP goes up just as if they were getting more of what they want.
Example of wheel-spinning: tax law becomes more complex. People need to spend more on help with their taxes, and possibly work longer hours to afford it. More economic activity, bur are their lives better?
You are correct, that not all activity recorded in GDP is welfare-enhancing. (Note that GDP also underreports some positive welfare activities.)
But that’s not the important point. The important point is: does the difference between the GDP measure, and some more accurate measure, have any implications for economic policy? The answer seems to be no: attempts have been made to define more precise welfare-tracking measures of national welfare, and the result seems to be that they track GDP very closely, and that there is basically no implication for policy decisions.
(Perhaps try an analogy? To oversimplify, in dermatology there are millions of different infections you might get on your skin, but roughly speaking only a small handful of possible treatments. A good doctor doesn’t attempt expensive diagnostics to figure out exactly what you have; the proper medical treatment is only to distinguish what general class of infection you have, so that the correct treatment can be applied from the small possibilities. Similarly, GDP is easy to measure, and results in pretty much the correct policy suggestions. Anecdotes of how it is not perfect, are only important in so far as they would imply different policy choices, when they usually don’t.)
I’m skeptical. Can I get a link to one or more of the alternative welfare-tracking measures?
That’s a fair point. I haven’t studied proposed alternative measures.
I like using immigration and emigration as rough measures for comparing how good places are to live, with an allowance for willingness to risk dying to move.
Have the immigration and emigration stats ever been out of sync with GDP?