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GDP is the wrong tool for measuring what matters (2020)

scientificamerican.com

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Re: GDP is the wrong tool for measuring what matters (2020)

#21

Post by Aerbil313 »

Two economists were walking down the street. One saw a dog s*t on the ground, and told the other: “If you eat that, I’ll give you thousand dollars.” Other guy looked at it, thought “It’s bad, but I’ll get $1000”, and ate it. His friend paid him, although he still regretted it because it was really bad. After some time, they encountered another dog s*t. This time the guy who ate it before, seeking revenge of the foul taste in his mouth, offered $1000 for eating it to his friend. He accepted, thinking “I’ll gain the $1000 I lost”. He ate it and got paid. After some time, they stopped for a while, and one said to other, “I feel like we just ate dog s*t for nothing”, his friend replied: “Oh, come on! We just contributed to the GDP by $2000, it can’t be for nothing!”

(Commented this exact comment a few days ago, but very relevant so doing it again.)

Re: GDP is the wrong tool for measuring what matters (2020)

#22

Post by kelseyfrog »

HyperSane wrote: post #12

GDP adjusted by Gini coefficient would be a better measure. A massive GDP overly concentrated in the top 1% of the population doesn't improve the lives of the rest of the population.

Inverse mean KL divergence between everyone's ideal wealth distribution and the actual wealth distribution.

Re: GDP is the wrong tool for measuring what matters (2020)

#23

Post by jl2718 »

Aerbil313 wrote: post #21

Two economists were walking down the street. One saw a dog s*t on the ground, and told the other: “If you eat that, I’ll give you thousand dollars.” Other guy looked at it, thought “It’s bad, but I’ll get $1000”, and ate it. His friend paid him, although he still regretted it because it was really bad. After some time, they encountered another dog s*t. This time the guy who ate it before, seeking revenge of the foul…

You forgot taxes. 500$ each.

Re: GDP is the wrong tool for measuring what matters (2020)

#24

Post by jl2718 »

Forgive me if I missed the objective quantitative measurement the article suggests to replace it.

GDP is kind of like measuring spending in your family when you should be measuring saving. It’s not meant to track personal well-being, but rather the strength of an economy, and for that, a better metric may be savings and investment rate.

Savings rate is a measurement of productivity normalized to consumption. Closely related is investment rate, which is savings times capital efficiency.

Re: GDP is the wrong tool for measuring what matters (2020)

#26

Post by andrei_says_ »

boeingUH60 wrote: post #16
andrei_says_ wrote: post #7

The Gross National Happiness index of Bhutan has been in place for 15 years. Maybe there’s something we can borrow from there. Gross National Happiness (GNH), sometimes called Gross Domestic Happiness (GDH), is a philosophy that guides the government of Bhutan. It includes an index which is used to measure the collective happiness and well-being of a population. Gross National Happiness Index is instituted as the goa…

Frankly, Bhutan is a backwater with a GDP per capita of around $3,000. I don’t think it’s a country people should be imitating despite all their marketing around happiness. Sure, the citizens might be happy, but people can be happy even in dire circumstances.

To clarify, my intention is to add to the measurement of value - not replace it.

The current measurements not only ignore but also contribute to the massive devastation of our irreplaceable biosphere, to the immense suffering caused by normalizing a barbaric, insensitive, cruel treatment for everything and everyone in the context of maximizing extraction and downright fraud of short term gains.

Donut (sustainable) economics is another model to consider.

https://en.m.wikipedia.org/wiki/Doughnut_(economic_model)

Re: GDP is the wrong tool for measuring what matters (2020)

#27

Post by andrei_says_ »

refurb wrote: post #18
jpdenford wrote: post #17

Earlier quoted context omitted.

Bhutan’s implementation of GDH aside. What matters more than happiness? Surely any other metric is just an (often misguided) approximation.

I mean, people can be happy out of ignorance, and that ignorance can include things that contribute to high child mortality. I'm not sure we should be ok with high child mortality, just because people are happy.

No one is suggesting that and no one is suggesting that happiness is somehow the result of this.

Re: GDP is the wrong tool for measuring what matters (2020)

#28

Post by sapling-ginger »

jl2718 wrote: post #24

Forgive me if I missed the objective quantitative measurement the article suggests to replace it. GDP is kind of like measuring spending in your family when you should be measuring saving. It’s not meant to track personal well-being, but rather the strength of an economy, and for that, a better metric may be savings and investment rate. Savings rate is a measurement of productivity normalized to consumption. Closely…

If I save 100% of my income, such that I get kicked out of my home, I can't go to work, can't buy food, and I starve to death, am I doing good financially?

Re: GDP is the wrong tool for measuring what matters (2020)

#29

Post by johntyree »

sapling-ginger wrote: post #28
jl2718 wrote: post #24

Forgive me if I missed the objective quantitative measurement the article suggests to replace it. GDP is kind of like measuring spending in your family when you should be measuring saving. It’s not meant to track personal well-being, but rather the strength of an economy, and for that, a better metric may be savings and investment rate. Savings rate is a measurement of productivity normalized to consumption. Closely…

If I save 100% of my income, such that I get kicked out of my home, I can't go to work, can't buy food, and I starve to death, am I doing good financially?

Yes? It would be a stupid way to live, but financially, I think you'd be doing "really well," conditional on your income, up until you died.

Re: GDP is the wrong tool for measuring what matters (2020)

#30

Post by vitehozonage »

supportengineer wrote: post #2

What matters is spending time with your loved ones. And it is measured in hours or days.

Agreed. Yet the Federal Reserve has a mandate to maximise employment, so to me it seems American society is quite literally manipulating the economy with a goal that's equivalent to maximising time away from your family
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