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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)

#251

Post by lmm »

refurb wrote: post #246
lmm wrote: post #236

Earlier quoted context omitted.

Measuring how useful the car is would be perfect. GDP is like measuring how useful the car is by its market value.

Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted). So market price tends to be a pretty good proxy for usefulness. People who complain about GDP as a measure are usually just complaining about things they don’t like that go into GDP like pointless (to them) consumer goods.

> Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted).

> So market price tends to be a pretty good proxy for usefulness.

That's quite a jump; market price can reflect usefulness, but it can reflect a lot of other things too. "This car must be useful to someone because it's expensive" is already questionable logic (at least without stretching "useful" to the point of meaninglessness), and "this car is more expensive than my current car, therefore it would be a good upgrade for me" is blatantly absurd.

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

#252

Post by DeathArrow »

fleddr wrote: post #75

"The philosopher John Stuart Mill noted more than 200 years ago that, once decent living standards were assured, human efforts should be directed to the pursuit of social and moral progress and the increase of leisure, not the competitive struggle for material wealth" Yes, we took the wrong turn. Most people are subjected to a life long rat race of economic relevance/volatility where most of their waking hours are sp…

>human efforts should be directed to the pursuit of social and moral progress and the increase of leisure, not the competitive struggle for material wealth"

What about not directing anything and maintaining a free world where any individual can pursue what goal he or she sees worthy?

I grew sick of governments or groups of self appointed elites trying to tell people how they should live their lives.

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

#253

Post by dirtyid »

scotty79 wrote: post #71
nostromo wrote: post #62

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.

Actually we can get better metrics than GDP by measuring amount of light on satellite night images. It fits GDP more or less for western democracies, but it it better measure for other countries.

Possibly, but also assuming it's an actually sophisticated analysis and not an naive one, like the Martinez Democracy vs Autocracy study that western MSM loves to peddle. NBER (one of top eco think tanks) did a sophisticated night lights study of PRC in 2017 - same year as OG Martinez study using naive methodology as Henderson original work from early 2010s - and found PRC's reported GDP was actually _underestimated_ using night light data. But for obvious reasons this study by multiple staff economists at the FED doesn't get any attention in western MSM, but one by an assistent prof of public policy somehow does. Almost as if it's good self marketting considering Martinez keeps updating study with same rudimentary methodology every few years to get clicks.

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

#254

Post by didibus »

DeathArrow wrote: post #250

>GDP measures mainly market transactions. It ignores social costs, environmental impacts and income inequality. But GDP's role was never to measure income inequality, environmental impacts, diversity, affirmative actions. It was always an economic tool, not a SJW tool. As an economic tool it just measures how well a country is able to produce and sell goods and services. And for that purpose I know no other better to…

> GDP per capita adjusted for PPP

What's the point of per-capita here?

I've found personally this is the part that cause confusion. The per-capita makes it look like each person is equally participating in the gross production and receiving an equal income from it.

Obviously that's false, the distribution is very uneven, so I've always wondered why we want it per-capita?

If 1 out of 100 people produces 100% of the GDP and it's the same total GDP as some 10 person neighbor country, why adjust it by capita?

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

#256

Post by refurb »

lmm wrote: post #251
refurb wrote: post #246

Earlier quoted context omitted.

Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted). So market price tends to be a pretty good proxy for usefulness. People who complain about GDP as a measure are usually just complaining about things they don’t like that go into GDP like pointless (to them) consumer goods.

> Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted). > So market price tends to be a pretty good proxy for usefulness. That's quite a jump; market price can reflect usefulness, but it can reflect a lot of other things too. "This car must be useful to someone because it's expensive" is al…

It’s not absurd. Usefulness is purely the decision of the buyer. You may think buying an expensive car to impress others is stupid, but so? All car sales don’t have to fit within your definition of usefulness.

Unless you want the government to step in and define appropriate “usefulness” it’s always going to be up to the Buyer.

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

#257

Post by dirtyid »

strangeattractr wrote: post #121
dakial1 wrote: 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?

They're probably referring to the rudimentary Martinez study that's making PRC collapists convinced PRC is over reporting GDP. For reference, much more sophisticated light study by NBER (staffed by FED economists) concluded PRC growth was higher than PRC reported GDP.

But more broadly, it's important to understand GDP in PRC is (and has always been) guestimate to appease foreign investers / media for comparison wank. It's well known PRC smooths GDP to show general trends, but internally they've used their own metrics like LKI index (proxy measurement using combination of rail freight activity, electricity usage, industrial activity etc) and total social financing to measure economic activity. A few years ago, the most rigorous western analysis of Chinese GDP I'm aware of was conducted by CSIS who comprehensively reverse engineered Chinese GDP reporting from ground up, sector by sector, and concluded China was (~1 trillion USD) larger than official numbers purported to be.

Also remember PRC has incentive to underreport GDP to keep developing economy perks. Ultimately, GDP like all statistics, is political. It's why internally PRC leadership is focusing on quality growth and "comprehensive national power" , a nebulous but (IMO) more useful composite index to guide development.

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

#258

Post by lmm »

refurb wrote: post #256
lmm wrote: post #251

Earlier quoted context omitted.

> Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted). > So market price tends to be a pretty good proxy for usefulness. That's quite a jump; market price can reflect usefulness, but it can reflect a lot of other things too. "This car must be useful to someone because it's expensive" is al…

It’s not absurd. Usefulness is purely the decision of the buyer. You may think buying an expensive car to impress others is stupid, but so? All car sales don’t have to fit within your definition of usefulness. Unless you want the government to step in and define appropriate “usefulness” it’s always going to be up to the Buyer.

> Usefulness is purely the decision of the buyer. You may think buying an expensive car to impress others is stupid, but so? All car sales don’t have to fit within your definition of usefulness.

Exactly. So saying that a more expensive car is always more useful is crazy. Maybe the more expensive car is too big for the roads where I live, or has worse fuel economy, or has less interior space.... Price and usefulness are not completely unrelated, but assuming they're equivalent is absurd.

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

#259

Post by ravel-bar-foo »

strangeattractr wrote: post #121
dakial1 wrote: 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?

Local government officials in China are promoted / demoted based on local GDP growth. This incentivizes them to increase local industry and also to fluff up estimates of local industrial output.

Repeat across the entire country for 20 years at every level of government, and as a result it is now estimated that China's actual GDP is half of its official GDP.

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

#260

Post by leroman »

fleddr wrote: post #75

"The philosopher John Stuart Mill noted more than 200 years ago that, once decent living standards were assured, human efforts should be directed to the pursuit of social and moral progress and the increase of leisure, not the competitive struggle for material wealth" Yes, we took the wrong turn. Most people are subjected to a life long rat race of economic relevance/volatility where most of their waking hours are sp…

Id suggest this is what is fueling the political craziness across the globe, people lost faith in the system and politicians, instead of fixing the issue, use peoples anger to advance some agenda.
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