[HN Gopher] Gross domestic product is a misleading measure of na...
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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.
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