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

nature.com

141–150 of 369 posts

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

#141
post #80

Earlier quoted context omitted.

It is not difficult to fake (e.g. China for the last 20 years). But I agree with you, we should add new metrics (and targets) but keep a GDP as one of them, also for the other indicators to mature (how they are measure, methodologies, transparency, etc...). Maybe one day GDP would be able to be left behind...

What do you mean when you say China fakes its GDP?

The Economist recently reported on a study that used the brightness of countries' lights at night as proxy for GDP[1][2]. The study suggests China and other autocracies have significantly exaggerated their GDP growth over the last twenty years.

[1]: https://www.economist.com/graphic-detail/2022/09/29/a-study-...

[2]: https://bfi.uchicago.edu/working-paper/how-much-should-we-tr...

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

#142
post #101

Earlier quoted context omitted.

While RFK sometimes got help from Edwin Guthman and Peter Edelman, he also spoke extemporaneously sometimes, most famously when he had to announce the death of Martin Luther King to a crowd that hadn't yet heard the news: https://kennedykingindy.org/full-rfk-speech

Where are the politicians today who can quote Aeschylus at will? What happened to our national discourse that we’ve filled it with dimwits?

To be fair, that kind of speech would alienate a lot of the public. An intelligent politician wouldn't even if they could-- unless they were running a very specialized campaign.

It's informative to look up some very old videos of George W speaking-- he sounds much more educated than he did when in office.

Now that speaking in a highly educated manner has become a signal of elite indifference (however that came to pass), I can't even say that the segment of public which is offended by it is wrong to be offended by it: Since anyone who could do it could turn it off, and they should turn it off-- the only reason they wouldn't is indifference to the people it might offend or ignorance of the norms in politics.

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

#143

Robert 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…

Quoted post unavailable.

It's not just about what GDP doesn't measure, it is about what it does measure.

If everybody buys guns and ammo to prepare for civil war it would be great for GDP but terrible by any other measure.

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

#144
post #101

Earlier quoted context omitted.

While RFK sometimes got help from Edwin Guthman and Peter Edelman, he also spoke extemporaneously sometimes, most famously when he had to announce the death of Martin Luther King to a crowd that hadn't yet heard the news: https://kennedykingindy.org/full-rfk-speech

Where are the politicians today who can quote Aeschylus at will? What happened to our national discourse that we’ve filled it with dimwits?

In the UK we have Boris Johnson and Jacob Rees Mogg, both of whom can and do regularly quote classical literature. You can have them.

No, really, please take them.

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

#146
post #10

GDP might be the ultimate example of Goodhart's Law: https://en.wikipedia.org/wiki/Goodhart%27s_law

I hate this law. There is no example of a good measure that does not become a target, nor should there be. The only question is who does the evaluating.

The typical example is: hospital emergency room wait times were made a "target" and therefore hospitals stopped admitting ambulances (literally having them circling around the block) before they had the staff freed up. But there's nothing wrong with emergency room wait times being kept low. The obvious locus of evaluation, however, was moved from the patient (who is evaluating his whole end-to-end emergency care on many metrics, including but not limited to emergency room wait time) to some bureaucrat who assesses the hospital only on the wait time.

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

#147
GDP, like many economic metrics, is of course not an absolute indicator of anything significant. You can set up two shell companies and have them buy and sell the same paper clip between them thousands of times a second, for a million dollars each. It will boost GDP by quite a lot.

Of course historically, such deception has not always dominated, and the apparent GDP has been a good proxy for total genuine economic activity. Economic activity is in turn a proxy for confidence: If everyone is spending more money, it means they're confident they see value being produced that they want to capture. Consumers presumably feel they'll be comfortable for years to come. Businesses think it's time to hire staff, increase production and focus on growth. These things by themselves can be seen as positive effects, but also it means GDP is effectively a crowdsourced predictor of future economic outlook. So GDP by itself isn't that interesting, but it correlates with many economic phenomena that are of interest, which is why it's been a popular measure.

I'm sure the article's authors are well aware of this. If you look at the title closely, there's a bit of sleight of hand: It is not common to claim (save perhaps for uneducated laypeople) that GDP is a measure of national success. It is commonly understood as a measure of economic health. Most people will readily grant that economic health does not necessarily mean national success, since they can decouple in crucial ways. For example, if your previously poor country suddenly becomes colonized by major imperialist powers, the GDP will certainly be bolstered, but the social and geopolitical effects may be detrimental. But when you attack the idea that GDP measures economic success, of course it sounds insightful, since it's the kind of misapprehension that is tempting to ascribe to others and not yourself. "Everyone has made a mistake- but not me!"

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

#148
post #131

Earlier quoted context omitted.

GDP is not what people randomly think it is. It is a measure of the economic output of a country. It isn’t about equality or productivity or did the money build a ghost town etc. If we had the magical mathematics to encode that much in a single number, we’d be traveling the stars.

I disagree wholeheartedly with the sentiment that "traveling the stars" is a worthy goal, even more worthy than stewardship of the paradise we already have. We are living in heaven. We have a wonderful planet that nurtures us yet we continue to sabotage our favorable situation for the sake of growing worthless numbers like GDP, all while some people starve or are forced into lives of misery. And yes, I have read Para…

People can track GDP without optimizing for it at the expense of the environment. Although, metrics do seem to hack the human brain in such a way that we can't help but try to optimize them, no matter how useless they are.

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

#149
post #80

It's hard to overstate how terrible this idea is. GDP is a concrete measure that is difficult to fake. Once you start arguing about the economic value of volunteering, divorce, income inequality, and crime -- you've opened the door to never being able to trust GDP again. Should we create new metrics to track progress? Sure. Should we stop tracking GDP? No way.

It is not difficult to fake (e.g. China for the last 20 years). But I agree with you, we should add new metrics (and targets) but keep a GDP as one of them, also for the other indicators to mature (how they are measure, methodologies, transparency, etc...). Maybe one day GDP would be able to be left behind...

If you control the media like China does, you can fake every metric if you want. In any place with a free press, economists could easily approximate GDP and report it if it were fake.

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

#150
post #9
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.

That's so laughable a statement I don't know where to begin. Maybe the private sector cares about it less (questionable in itself given how the stock market obsesses over recession signals) but governments absolutely use GDP for policy decisions.

can you name one, please?
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