GDP might be the ultimate example of Goodhart's Law: https://en.wikipedia.org/wiki/Goodhart%27s_law
By this do you mean that GDP is being gamed?
Basically yes, to the Bastiat point.
Gross domestic product is a misleading measure of national success (2014)
51–60 of 369 posts
Re: Gross domestic product is a misleading measure of national success (2014)
#52Nobody 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.
Here in the UK, the previous prime minister Liz Truss introduced a raft of policies based on stimulating economic growth. I don't know what this means, if not boosting GDP, but perhaps someone can show me otherwise. It even got to the point that less right-wing parties were labelled as the "anti-growth coalition".
Re: Gross domestic product is a misleading measure of national success (2014)
#53I was surprised to learn that, in the US, health care is part of GDP. How messed up is that? Health care costs are not a productive output of an economy and to include them in GDP is ludicrous.
By that token why not exclude entertainment spending as useless. In reality people devote surplus to things they want rather than pure needs.
Re: Gross domestic product is a misleading measure of national success (2014)
#54The 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.
GDP means income. That's it. There is no secret, no grand conspiracy.
Re: Gross domestic product is a misleading measure of national success (2014)
#55Earlier quoted context omitted.
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…
>What GDP gives us is a way to frame policy.
>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.
Strong disagree on this. Policies aren't just framed on "GDP goes up, we should do it", they're framed on "GDP goes up by $x at the cost of $y, so we should do it". A policy that claims to increase GDP, but where $x is smaller than $y is going to get shot down even if it sounds good.
With GDP there's at least some way of checking your estimates. You can fudge your estimates up or down by changing your assumptions, but in the end you're still trying to pin down how much economic activity will occur and that can be cross-checked with tax records or government statistics. How are you going to do the same with GNP?
Re: Gross domestic product is a misleading measure of national success (2014)
#56Given the established link between energy consumption and human welfare and happiness...why not use BTU consumed per capita? Or even Barrels of oil equivalent.
Re: Gross domestic product is a misleading measure of national success (2014)
#57It's grossly misleading to suggest that economists use GDP as a measure of national success
Re: Gross domestic product is a misleading measure of national success (2014)
#58Robert Kennedy, on the campaign trail in 1968:
"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.
It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.
It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.
Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.
It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.
And it can tell us everything about America except why we are proud that we are Americans."
https://www.theguardian.com/news/datablog/2012/may/24/robert...
Re: Gross domestic product is a misleading measure of national success (2014)
#59As another great example of this: hurricane Katrina was a huge stimulus for economic activity in New Orleans, measured in terms of GDP.
Re: Gross domestic product is a misleading measure of national success (2014)
#60Earlier quoted context omitted.
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?
It’s the reason given, usually in comparison to other G7 countries.