Thursday, February 1, 2018

two problems with GDP

I'd rate GDP slightly lower than the poverty rate-- in the contest for worst statistical proxy for a key economic/social concept.

GDP "wins" for many reasons. In my Micro classes, we just covered "consumer surplus"-- the (sometimes immense) value that consumers receive *above* price. Since GDP proxies "value" *with* price, it necessarily (and drastically) underestimates (true) value.

This article implies another: ignoring the social/economic value of work in the home. Think of it this way: if 20% of double-income families decided to have one person stay home to spend more time with kids and the household, GDP would plummet, but those people would be doing it to improve their lives.


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