My take on it is not trying to be simple. It is showing one fundamental issue that would instantly change the entire calculation if reflected. The fact that it was not a diverse group of people from diverse background probably meant they missed something so fundamental.
The analogy you used just doesnt work in my view. The fact that you’re depressed would already lower an equivalent measure of wellbeing. The underlying point that you are depressed does not change whether you seek treatment or not. You’re more likely to take sick days, more likely to have other health conditions, more likely to abuse drugs/alcohol, and other factors that could potentially be measured. Being depressed is not a choice but looking after your children or cleaning your own house is a choice.
We should at least make an attempt to try. I agree it would be difficult bit then they were trying to come up with GDP, it would’ve seemed to be an impossible task but they managed to find a way.
We should also make an attempt to fix the issues with GDP or stop using it as much as it is. Why is it ok to use this metric over any other?
“Why is it OK to use a metric” is a weird question to ask. Why wouldn’t it be OK?
You could certainly try and take other things into account but… do you believe that the UK government does not consider any metrics except GDP when designing policy? Do you believe that voters don’t consider any other outcomes when deciding whom to vote for? These are clearly not the case, and using several metrics together is equivalent to tweaking one metric to incorporate additional facts.
The way we really see the particular example you picked is by comparing unpaid and paid childcare. So the government could subtract paid childcare from headline GDP statistics, on the assumption that what that actually pays for is something that would otherwise happen anyway without payment.
But what would making this tweak achieve? Do you think people are out there pushing for an expansion to free childcare because it would make GDP figures go up? Because I think we push for that because it’s the right thing to do for society.
As for my example, I think if you thought a little bit you’d see how practical ways of measuring depression (such as numbers of diagnoses in the NHS) would be subject to the same perverse incentives you’re talking about with how GDP is measured. You suggested some proxies for wellbeing. Let’s take number of sick days: the perverse incentive there would be that the government might launch a crackdown on slackers taking sick days they don’t need to make the numbers look better, even though that’s bad for society.
Maybe this isn’t the kind of thing you’re worried about with GDP, but then I don’t really knwo what is.
You’re very correct, in that any measure that becomes valued turns into a gamified target.
I do think that we have a habit of using GDP rather than GNP to obscure how many British products have been bought by Yanks, and have their profits syphoned off overseas.
My bigger issues with GDP is how it does tend to end up as the sole yardstick used in mainstream economics debates, and how it often includes financial services - which seems an artifical inflation; for instance simply paying the fees on a savings account (or even the overdraft fee) count towards GDP figures by default, but then arbitrarily choosing what to exclude makes a whole lot of new problems, and is something else you’re right about, too.
any measure that becomes valued turns into a gamified target
That’s a cynical management cliche that every newly-minted MBA seems to repeat. Its real intent is to raise awareness that measures can be gamed. But another MBA cliche with more substance is that you cannot manage what you can’t measure (again with the caveat that you might be inadvertently creating incentives to cook the books when you do so). Every business and almost every government organisation rely on metrics and KPIs in order to function, and it’s difficult to imagine any system where that’s not the case.
I learned thermodynamics before I learned economics, so it didn’t escape my notice that GDP looks more like a measure of heat than a measure of work. It gives an overall “operating temperature” of the economy, which is a useful thing to know, but it doesn’t tell you what good it’s doing you. For example, paying a milion people to dig holes, then fill them back in, would be reflected in GDP. The usefulness of that activity is a separate question. Broken window theory, etc.
I learned thermodynamics before I learned economics, so it didn’t escape my notice that GDP looks more like a measure of heat than a measure of work. It gives an overall “operating temperature” of the economy
That’s a really good analogy for it, thanks for sharing.
My take on it is not trying to be simple. It is showing one fundamental issue that would instantly change the entire calculation if reflected. The fact that it was not a diverse group of people from diverse background probably meant they missed something so fundamental.
The analogy you used just doesnt work in my view. The fact that you’re depressed would already lower an equivalent measure of wellbeing. The underlying point that you are depressed does not change whether you seek treatment or not. You’re more likely to take sick days, more likely to have other health conditions, more likely to abuse drugs/alcohol, and other factors that could potentially be measured. Being depressed is not a choice but looking after your children or cleaning your own house is a choice.
We should at least make an attempt to try. I agree it would be difficult bit then they were trying to come up with GDP, it would’ve seemed to be an impossible task but they managed to find a way.
We should also make an attempt to fix the issues with GDP or stop using it as much as it is. Why is it ok to use this metric over any other?
“Why is it OK to use a metric” is a weird question to ask. Why wouldn’t it be OK?
You could certainly try and take other things into account but… do you believe that the UK government does not consider any metrics except GDP when designing policy? Do you believe that voters don’t consider any other outcomes when deciding whom to vote for? These are clearly not the case, and using several metrics together is equivalent to tweaking one metric to incorporate additional facts.
The way we really see the particular example you picked is by comparing unpaid and paid childcare. So the government could subtract paid childcare from headline GDP statistics, on the assumption that what that actually pays for is something that would otherwise happen anyway without payment.
But what would making this tweak achieve? Do you think people are out there pushing for an expansion to free childcare because it would make GDP figures go up? Because I think we push for that because it’s the right thing to do for society.
As for my example, I think if you thought a little bit you’d see how practical ways of measuring depression (such as numbers of diagnoses in the NHS) would be subject to the same perverse incentives you’re talking about with how GDP is measured. You suggested some proxies for wellbeing. Let’s take number of sick days: the perverse incentive there would be that the government might launch a crackdown on slackers taking sick days they don’t need to make the numbers look better, even though that’s bad for society.
Maybe this isn’t the kind of thing you’re worried about with GDP, but then I don’t really knwo what is.
You’re very correct, in that any measure that becomes valued turns into a gamified target.
I do think that we have a habit of using GDP rather than GNP to obscure how many British products have been bought by Yanks, and have their profits syphoned off overseas.
My bigger issues with GDP is how it does tend to end up as the sole yardstick used in mainstream economics debates, and how it often includes financial services - which seems an artifical inflation; for instance simply paying the fees on a savings account (or even the overdraft fee) count towards GDP figures by default, but then arbitrarily choosing what to exclude makes a whole lot of new problems, and is something else you’re right about, too.
That’s a cynical management cliche that every newly-minted MBA seems to repeat. Its real intent is to raise awareness that measures can be gamed. But another MBA cliche with more substance is that you cannot manage what you can’t measure (again with the caveat that you might be inadvertently creating incentives to cook the books when you do so). Every business and almost every government organisation rely on metrics and KPIs in order to function, and it’s difficult to imagine any system where that’s not the case.
I learned thermodynamics before I learned economics, so it didn’t escape my notice that GDP looks more like a measure of heat than a measure of work. It gives an overall “operating temperature” of the economy, which is a useful thing to know, but it doesn’t tell you what good it’s doing you. For example, paying a milion people to dig holes, then fill them back in, would be reflected in GDP. The usefulness of that activity is a separate question. Broken window theory, etc.
That’s a really good analogy for it, thanks for sharing.