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Gross domestic product is a misleading measure of national success (2014)

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Re: Gross domestic product is a misleading measure of national success (2014)

#31

Post by makeitdouble »

bootsmann wrote: post #25
chrisweekly wrote: post #18

I 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 ge…

It’s the usual tension between an easy measure of something highly misleading and a harder to measure actually meaningful index.

IMO going the easier route invariably brings along many other dangerous shortcuts.

For instance here you mention “scientific method” for GDP when the measure in itself isn’t that reliable: what fits inside GDP isn’t fixed nor objective, and a lot of decisions happens upon survey. We have countries (most countries ?) regularly reshaping how they measure GDP to fit the narrative they need.

Re: Gross domestic product is a misleading measure of national success (2014)

#32

Post by bee_rider »

tabtab wrote: post #14

One problem with this idea is that if you don't grow your GDP, countries that do grow it will stomp you militarily and/or diplomatically.

Military spending (possibly PPP adjusted) seems like a better metric for that sort of thing anyway.

Re: Gross domestic product is a misleading measure of national success (2014)

#34

Post by Foofoobar12345 »

chrisweekly wrote: post #18

I like Bhutan's constitutional adoption of "Gross National Happiness" as an alternative: https://en.m.wikipedia.org/wiki/Gross_National_Happiness

Having visited Bhutan and spent a considerable amount of time there, I've noticed the locals aren't that much happier than most other places in the world. It's difficult to be happy when you have to constantly worry about how to put food on the table. I've gotten swindled enough times in Bhutan, however not as much as in certain "shit-hole" cities that I shall not name.

The whole "GNH" concept was created by McKinsey, contracted by Bhutan - I know the leads on that project. While it does bring in some level of national identity to rally around, I think the primary benefit it brings is in marketing. There are some meditation centers in Bhutan that charge more than $5K/day, targeted towards the extremely rich who have lost a sense of peace in their pursuit of wealth. This, of course, is a grand con - there's no happiness you're going to find in Bhutan that you can't find in your immediate surroundings.

New Zealand, on the other hand, I feel is doing a lot better. There's a general acceptance that communing with nature is important, while at the same time, they readily embrace modern comforts and continue building their economy. They're also attempting to build a better way to interact with natives and are creating programs such as EHF (ehf.org) to attempt to tackle the grand planet-wide problems, with impact as a focus.

True impact is impossible to measure with just any one number. Anyone who attempts to put a number to this will run into the trouble of that number getting gamed.

Re: Gross domestic product is a misleading measure of national success (2014)

#35

Post by geysersam »

rajeshp1986 wrote: post #13

It 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.

That may be so. Interesting observation. But GDP might still be a flawed measure, for the reasons mentioned in the article.

Re: Gross domestic product is a misleading measure of national success (2014)

#36

Post by abeppu »

rajeshp1986 wrote: post #13

It 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.

You're saying western countries want metrics which show that they're doing well and GDP no longer fits the bill? My intuition is that the opposite is the case; people in countries which have high GDP per capita who still _feel_ that they're suffering want numbers that validate their problems as real and serious.

Americans are on top from the GDP perspective, in the top 10 for GDP per capita, but it doesn't make them live longer or healthier, doesn't make them happy or less stressed, doesn't give them good schools or stability or fulfilling work or optimism about the future or confidence in institutions. I want the leading metric to show that things are _bad_ so politicians stop pretending that they're good at governing just because of the success of an economy they have little to do with.

Re: Gross domestic product is a misleading measure of national success (2014)

#37

Post by TheDong »

bootsmann wrote: post #25
chrisweekly wrote: post #18

I 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 ge…

> causality is so much harder to prove [...] The whole point of having measurable metrics and models is that they allow the use of the scientific method in policy making

A happiness index is hard to measure, agreed... but that's also not how GDP is used.

Policy-makers will say "our research shows lowering taxes will do X and increase GDP", or "our research shows raising taxes will do Y and increase GDP". That happens now. I don't think we usually actually manage to tie an actual law or policy, as implemented, back to a change in GDP pretty much ever. It's not really the scientific method.

What GDP gives us is a way to frame policy.

If our number were "National Happiness", policies would be framed in terms of that. "Increasing taxes lets us make this work better, and increases happiness" and "Decreasing taxes gives people more money, which increases happiness". The same policies, but framed differently, and with different arguments as a result.

That framing seems better to me, and how measurable and "scientific" it is seems like it would barely change.

Re: Gross domestic product is a misleading measure of national success (2014)

#38

Post by la64710 »

Foofoobar12345 wrote: post #34
chrisweekly wrote: post #18

I like Bhutan's constitutional adoption of "Gross National Happiness" as an alternative: https://en.m.wikipedia.org/wiki/Gross_National_Happiness

Having visited Bhutan and spent a considerable amount of time there, I've noticed the locals aren't that much happier than most other places in the world. It's difficult to be happy when you have to constantly worry about how to put food on the table. I've gotten swindled enough times in Bhutan, however not as much as in certain "shit-hole" cities that I shall not name. The whole "GNH" concept was created by McKinsey…

Very well articulated. Thanks for sharing.

Re: Gross domestic product is a misleading measure of national success (2014)

#39

Post by danielmarkbruce »

dragonwriter wrote: post #8
nonrandomstring wrote: post #7

Reading an earlier thread on Perl I was thinking about how concepts, language and behaviour relate (as Wittgenstein and Ayer might have it). Someone mentioned how, as a Python user, they barely had to think about pointers/references. Things get magically referenced when needed. Seems like progress. When concepts get coded into a language, in this case "economics" (which is a tool for trying to see the world), they pu…

> So, we could certainly try to supplant GDP as a metric. This is very apparent, because it was only about 30 years ago that GDP itself replaced GNP as the preferred metric for the same purposes in the US. The article mentions the use of GDP internationally for longer, but the US preferred GNP until 1991. Its also worth noting that the creator of the GDP, a decade before it became dominant (internationally), also war…

A a set of measurements is required in many places and sadly it's missed in those places too. Humans love simple explanations, simple measurements, simple models, simple stories, anything which fits in our tiny brains without too much effort. Whether or not those measurements/explanations/models/stories represent reality sufficiently to be useful appears to be beside the point.

Re: Gross domestic product is a misleading measure of national success (2014)

#40

Post by JumpCrisscross »

deltree7 wrote: post #4

Nobody 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.

> Nobody makes any policy decisions based on GDP

Voters respond to GDP prints. See the hand wringing and pearl clutching around whether or not we're in a recession. If voters care about it, politicians do too.

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