[HN Gopher] Gross domestic product is a misleading measure of na... ___________________________________________________________________ Gross domestic product is a misleading measure of national success Author : kitkat_new Score : 64 points Date : 2022-10-31 21:14 UTC (1 hours ago) (HTM) web link (www.nature.com) (TXT) w3m dump (www.nature.com) | tabtab wrote: | One problem with this idea is that if you don't grow your GDP, | countries that do grow it will stomp you militarily and/or | diplomatically. | bee_rider wrote: | Military spending (possibly PPP adjusted) seems like a better | metric for that sort of thing anyway. | mind-blight wrote: | This should be marked as [2014] | chrisweekly wrote: | I like Bhutan's constitutional adoption of "Gross National | Happiness" as an alternative: | https://en.m.wikipedia.org/wiki/Gross_National_Happiness | Foofoobar12345 wrote: | Having visited Bhutan and spent a considerable amount of time | there, I've noticed the locals aren't that much happier than | most other places in the world. It's difficult to be happy when | you have to constantly worry about how to put food on the | table. I've gotten swindled enough times in Bhutan, however not | as much as in certain "shit-hole" cities that I shall not name. | | The whole "GNH" concept was created by McKinsey, contracted by | Bhutan - I know the leads on that project. While it does bring | in some level of national identity to rally around, I think the | primary benefit it brings is in marketing. There are some | meditation centers in Bhutan that charge more than $5K/day, | targeted towards the extremely rich who have lost a sense of | peace in their pursuit of wealth. This, of course, is a grand | con - there's no happiness you're going to find in Bhutan that | you can't find in your immediate surroundings. | | New Zealand, on the other hand, I feel is doing a lot better. | There's a general acceptance that communing with nature is | important, while at the same time, they readily embrace modern | comforts and continue building their economy. They're also | attempting to build a better way to interact with natives and | are creating programs such as EHF (ehf.org) to attempt to | tackle the grand planet-wide problems, with impact as a focus. | | True impact is impossible to measure with just any one number. | Anyone who attempts to put a number to this will run into the | trouble of that number getting gamed. | la64710 wrote: | Very well articulated. Thanks for sharing. | sporadicallyjoe wrote: | The Human Development Index is another good alternative: | https://en.wikipedia.org/wiki/Human_Development_Index | bootsmann wrote: | Thing with this is that causality is so much harder to prove so | any type of evidence-based policy is reduced to stabbing around | in the dark hoping that the odds of the next happiness poll are | not diluted by some random corruption scandal. | | The whole point of having measurable metrics and models is that | they allow the use of the scientific method in policy making, | whilst asking random people in the street might just get | different answers whether you are asking them during or after | their lunch break. | TheDong wrote: | > causality is so much harder to prove [...] The whole point | of having measurable metrics and models is that they allow | the use of the scientific method in policy making | | A happiness index is hard to measure, agreed... but that's | also not how GDP is used. | | Policy-makers will say "our research shows lowering taxes | will do X and increase GDP", or "our research shows raising | taxes will do Y and increase GDP". That happens now. I don't | think we usually actually manage to tie an actual law or | policy, as implemented, back to a change in GDP pretty much | ever. It's not really the scientific method. | | What GDP gives us is a way to frame policy. | | If our number were "National Happiness", policies would be | framed in terms of that. "Increasing taxes lets us make this | work better, and increases happiness" and "Decreasing taxes | gives people more money, which increases happiness". The same | policies, but framed differently, and with different | arguments as a result. | | That framing seems better to me, and how measurable and | "scientific" it is seems like it would barely change. | makeitdouble wrote: | It's the usual tension between an easy measure of something | highly misleading and a harder to measure actually meaningful | index. | | IMO going the easier route invariably brings along many other | dangerous shortcuts. | | For instance here you mention "scientific method" for GDP | when the measure in itself isn't that reliable: what fits | inside GDP isn't fixed nor objective, and a lot of decisions | happens upon survey. We have countries (most countries ?) | regularly reshaping how they measure GDP to fit the narrative | they need. | nonrandomstring wrote: | Reading an earlier thread on Perl I was thinking about how | concepts, language and behaviour relate (as Wittgenstein and Ayer | might have it). | | Someone mentioned how, as a Python user, they barely had to think | about pointers/references. Things get magically referenced when | needed. Seems like progress. | | When concepts get coded into a language, in this case "economics" | (which is a tool for trying to see the world), they put down | roots. Other concepts "hang off" them. So, we could certainly try | to supplant GDP as a metric. But then what of all the other | economic structures that people have built on GDP? Who will let | go of those? | | You have to tear down entire branches of thought and replace them | with new utility concepts that make using old ones as | anachronistic as using pointers in Python. | dragonwriter wrote: | > So, we could certainly try to supplant GDP as a metric. | | This is very apparent, because it was only about 30 years ago | that GDP itself replaced GNP as the preferred metric for the | same purposes in the US. The article mentions the use of GDP | internationally for longer, but the US preferred GNP until | 1991. | | Its also worth noting that the creator of the GDP, a decade | before it became dominant (internationally), also warned | against overfocusing on it as a measure of welfare, in terms | that really apply to _any_ simple unidimensional measure: | | "The valuable capacity of the human mind to simplify a complex | situation in a compact characterization becomes dangerous when | not controlled in terms of definitely stated criteria. With | quantitative measurements especially, the definiteness of the | result suggests, often misleadingly, a precision and simplicity | in the outlines of the object measured. Measurements of | national income are subject to this type of illusion and | resulting abuse, especially since they deal with matters that | are the center of conflict of opposing social groups where the | effectiveness of an argument is often contingent upon | oversimplification" [0] | | The state of the economy is complex and multidimensional, and | we need a _set_ of measures which reflect that. | | [0] https://fraser.stlouisfed.org/title/national- | income-1929-193... , pp. 5-6 | pishpash wrote: | Has anyone used the growth of national wealth, or is that | equivalent to GNI/GNP somehow? (I don't think so but maybe?) | jamesgill wrote: | The silliness of GDP is one of the worst-kept secrets in politics | and economics. It's like measuring the quality of a car by how | fast it's going. | hansvm wrote: | Is that the reason GDP is silly though? Under the assumption | that the car will attempt to go as fast as capable (not usually | true for cars, plausibly true for an economy) and that the | capability is a measure of quality (true for both), GDP serves | as a nice proxy for something we do care about. | JohnJamesRambo wrote: | Or how good your wine is by the alcohol percentage. | eterevsky wrote: | As the article correctly mentions, GDP is analogous to a company | revenue. It doesn't directly reflect the profit, but it is an | objective metric which is relatively easy to reason about. | knaekhoved wrote: | "... and replace it with a metric which explicitly optimizes for | all the policies I personally like." | tabtab wrote: | GPD is also personal choice. There's no Grand Law of the | Universe which says GDP should be the primary metric. Its | importance is an invention of human minds, out of either human | nature and/or historical happenstance. | rav wrote: | Needs (2014) in the title. | deltree7 wrote: | 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. | transcriptase wrote: | Tell that to the Canadian government. It currently considers | massive deficits fine because of our debt-to-GDP ratio, despite | GDP being driven by a real estate bubble for the last several | years. | opportune wrote: | The Canadian government is also growing their tax base/GDP | quickly due to high levels of working-age immigration, not | just real estate | bee_rider wrote: | Is there a requirement to keep the debt-to-GDP ratio below | some cap or something? Or is this just the reason the give | when questioned about it by the media, etc? | pishpash wrote: | 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. | mgfist wrote: | China has literal GDP targets. Yes it's very dumb | dopidopHN wrote: | I'm under the impression that country that are under some IMF | settlement process can have a GDP policy tack to a loan. | | But I might be wrong, maybe it's primarily and essentially | budget cuts. | | At least the GDP is used as a justification metric. | | I think we will naturally grow out of it. | | Taking economics 101 in a French high school 20 years ago... I | was already told it was a imperfect peace of information that | have to be compounded. | [deleted] | xnx wrote: | GDP might be the ultimate example of Goodhart's Law: | https://en.wikipedia.org/wiki/Goodhart%27s_law | sbelskie wrote: | By this do you mean that GDP is being gamed? | tabtab wrote: | A common example is "lines of code". If you pay by lines of | code, then coders will bloat up code to pad their metrics, | making it verbose and redundant. | tootie wrote: | Yup. There is simply no way we can replace GDP with another | metric. There's always a thousand smartasses who say the | unemployment rate is fake. It's not fake, it's an indicator and | can never tell a complete story. Employment, economic activity, | inflation, trade are all drowning in data points that inform | some specific minutiae. | | The solution is to not base policy on indicators but politics | needs to keep things simple. | nicoburns wrote: | I'd argue that "free market" pricing in general is. The | attitude that "something is valuable if people are willing to | pay for it" is being increasingly overfitted. | rajeshp1986 wrote: | It is interesting how western countries want to change the metric | for economic progress when they are lagging on it. They wouldn't | leave GDP as metric if all was well. | geysersam wrote: | That may be so. Interesting observation. But GDP might still be | a flawed measure, for the reasons mentioned in the article. | abeppu wrote: | You're saying western countries want metrics which show that | they're doing well and GDP no longer fits the bill? My | intuition is that the opposite is the case; people in countries | which have high GDP per capita who still _feel_ that they're | suffering want numbers that validate their problems as real and | serious. | | Americans are on top from the GDP perspective, in the top 10 | for GDP per capita, but it doesn't make them live longer or | healthier, doesn't make them happy or less stressed, doesn't | give them good schools or stability or fulfilling work or | optimism about the future or confidence in institutions. I want | the leading metric to show that things are _bad_ so politicians | stop pretending that they're good at governing just because of | the success of an economy they have little to do with. | systemvoltage wrote: | It's similar to redefining what 'recession' means when things | aren't going well. ___________________________________________________________________ (page generated 2022-10-31 23:00 UTC)