The silliness of GDP is one of the worst-kept secrets in politics and economics. It's like measuring the quality of a car by how fast it's going.
Gross domestic product is a misleading measure of national success (2014)
21–30 of 369 posts
Re: Gross domestic product is a misleading measure of national success (2014)
#22As the article correctly mentions, GDP is analogous to a company revenue. It doesn't directly reflect the profit, but it is an objective metric which is relatively easy to reason about.
Re: Gross domestic product is a misleading measure of national success (2014)
#23I like Bhutan's constitutional adoption of "Gross National Happiness" as an alternative: https://en.m.wikipedia.org/wiki/Gross_National_Happiness
The Human Development Index is another good alternative: https://en.wikipedia.org/wiki/Human_Development_Index
Re: Gross domestic product is a misleading measure of national success (2014)
#24The silliness of GDP is one of the worst-kept secrets in politics and economics. It's like measuring the quality of a car by how fast it's going.
Is that the reason GDP is silly though? Under the assumption that the car will attempt to go as fast as capable (not usually true for cars, plausibly true for an economy) and that the capability is a measure of quality (true for both), GDP serves as a nice proxy for something we do care about.
Re: Gross domestic product is a misleading measure of national success (2014)
#25I like Bhutan's constitutional adoption of "Gross National Happiness" as an alternative: https://en.m.wikipedia.org/wiki/Gross_National_Happiness
Thing with this is that causality is so much harder to prove so any type of evidence-based policy is reduced to stabbing around in the dark hoping that the odds of the next happiness poll are not diluted by some random corruption scandal.
The whole point of having measurable metrics and models is that they allow the use of the scientific method in policy making, whilst asking random people in the street might just get different answers whether you are asking them during or after their lunch break.
Re: Gross domestic product is a misleading measure of national success (2014)
#26Nobody makes any policy decisions based on GDP. It's just a proxy of economic activity. Nobody ever said, We (won't) need policy X because we are at Y GDP. Companies make decision based on supply/demand. So, this whole research is kinda pointless. In fact the worst thing anyone could do is have a metric and make the entire nation focus on that.
China has literal GDP targets. Yes it's very dumb
Re: Gross domestic product is a misleading measure of national success (2014)
#27The silliness of GDP is one of the worst-kept secrets in politics and economics. It's like measuring the quality of a car by how fast it's going.
Or how good your wine is by the alcohol percentage.
Re: Gross domestic product is a misleading measure of national success (2014)
#28It is interesting how western countries want to change the metric for economic progress when they are lagging on it. They wouldn't leave GDP as metric if all was well.
It's similar to redefining what 'recession' means when things aren't going well.
Re: Gross domestic product is a misleading measure of national success (2014)
#29GDP might be the ultimate example of Goodhart's Law: https://en.wikipedia.org/wiki/Goodhart%27s_law
I'd argue that "free market" pricing in general is. The attitude that "something is valuable if people are willing to pay for it" is being increasingly overfitted.
Re: Gross domestic product is a misleading measure of national success (2014)
#30Nobody makes any policy decisions based on GDP. It's just a proxy of economic activity. Nobody ever said, We (won't) need policy X because we are at Y GDP. Companies make decision based on supply/demand. So, this whole research is kinda pointless. In fact the worst thing anyone could do is have a metric and make the entire nation focus on that.
Tell that to the Canadian government. It currently considers massive deficits fine because of our debt-to-GDP ratio, despite GDP being driven by a real estate bubble for the last several years.
Is there a requirement to keep the debt-to-GDP ratio below some cap or something? Or is this just the reason the give when questioned about it by the media, etc?