Topic: A Nobel-winning economist says it’s time to kill the GDP metrics (Read 391 times)

I didn't suggest it was "wrong" or "fake." I'm just agreeing with what Stiglitz et al. are saying:

It's not about better or worse, just that growth shouldn't be the only metric that matters. Governments should be more concerned about economic inequality, wage stagnation, growing healthcare costs as a portion of wages, etc.

Well, GDP was never a measure of how good living in a country is...
For example, New Zeeland stands on rank 51 with 200 trillion while Bangladesh is on 289 with 319 trillion....
The GDP of a country can grow simply by an increased population, that's why we have GDP per capita, and then we have GDP PP

The indicator does what is supposed to do, that people use it in a way it is not supposed to be used doesn't mean it's wrong or fake one

The question is, what would be a better indicator?

Well, GDP was never a measure of how good living in a country is...
For example, New Zeeland stands on rank 51 with 200 trillion while Bangladesh is on 289 with 319 trillion....
The GDP of a country can grow simply by an increased population, that's why we have GDP per capita, and then we have GDP PP

The indicator does what is supposed to do, that people use it in a way it is not supposed to be used doesn't mean it's wrong or fake one

The question is, what would be a better indicator?
How would we manage to quantify in numbers wages and expenses and health and happiness?
I've never seen anything like that.

As for that environment stuff, here's an index:
https://epi.envirocenter.yale.edu/epi-topline?country=&order=field_epi_rank_new&sort=asc

But if you think about the environment and you have France on 2nd, the UK on 6th and Tanzania on the 100+ although 40% of the country is made of wildlife parks and protected areas, something is definitely wrong!!!

~

Economists perpetually paint a rosy picture of the economy because of continued growth. Meanwhile, wages have been stagnating for decades, the middle class is disappearing, and rising healthcare costs are completely unsustainable over the long term for average Americans. The vast majority of economic growth in the US over the past two decades has been completely swallowed up by Wall Street.

All the focus on GDP obfuscates this reality. All I'm saying is, maybe we shouldn't be focusing on GDP so much. There is too much value placed on growth. We need to start emphasizing other metrics that place value on things that matter to everyday working people.

Why the hell should the indicator of how powerful the economy of a country is take into consideration environmental degradation?
That would lead to a series of far more idiotic indexes.
How are you going to quantify this, how are you going to measure it?

Agree with this.

The issue isn't GDP. It's that we use GDP for, and forget about what is done to increase that GDP. As I said before, GDP increasing isn't always 'more output being produced for more consumers'

It could be caused by natural disasters, some sort of health crisis, warfare, etc.

We use GDP as the end-all be all economic indicator when it can be used as a complement to others.

And of course, you have an example when this was happening, right?  


Why the hell should the indicator of how powerful the economy of a country is take into consideration environmental degradation?
That would lead to a series of far more idiotic indexes.
How are you going to quantify this, how are you going to measure it?

You think US will look worse, then how is China going to look? Or India?
Probably because it more virgin forests, Bulgaria will become the new Switzerland  


Yeah, I would love to see others doing this. Others!
Natural stuff...Please type the next message by carrier pigeon  

For example, if your tax rates stay steady from year to year, but tax receipts fall, then the economy is doing badly no matter what GDP says.

Putting more value on metrics like economic inequality, the deteriorating middle class, environmental degradation, etc. would make places like the US look much worse.

I would prefer to see people living in moderation, cutting down on unnecessary stuff owned by individual and relying more on natural stuff. I think this is one of the secrets to happiness.

It appears people of the world are too feeble minded and uneducated to understand GDP. And so the powers that be are calling for GDP numbers to become obsolescent, so that we feeble minded do not injure ourselves attempting to make sense of GDP.
[...]
This is strikingly similar to americans being denied access to ICOs, access to leveraged crypto based trading platforms like bitmex, crypto ETFs and other innovations. Everywhere throughout the world, opportunities and options are being denied to some demographics. Doors are being closed. What's the reason for this, do you support it? How do people interpret the motive behind these policies?

So much of our GDP now is purely growth in the financial markets. Hedge funds and investment banks are sucking up all the growth while wages have been completely stagnant for many years, thus the deterioration of the middle class.

Normally. GDP shrinks as doors are closed and opportunities are diminished.

Getting rid of the GDP metric is simlar to getting rid of deficit numbers or redefining unemployment metrics to illustrate a rosier picture of the economy.

Climate change is only the latest crisis being leveraged to push political agendas.

-Drug crisis: citizens must sacrifice rights, $$ and freedom to fix this.
-Terrorist crisis: citizens must sacrifice rights, $$ and freedom to fix this.
-Climate crisis: citizens must sacrifice rights, $$ and freedom to fix this.

And who creates this crisis? As all of these are manufactured agendas.

I hate to support what economists say but I agree with him in this case, as long as a Hitler does not arise tommorow and start property seizure in order to eliminate these problems.

I would prefer to see people living in moderation, cutting down on unnecessary stuff owned by individual and relying more on natural stuff. I think this is one of the secrets to happiness.

 The way we live on this planet is just too dangerous and unsustainable. Reminds me of how cancer grows at the expense of the body it grows on

There isn't a mysterious censorship blackout at all. In the EU, the deficit is calculated per member state:

https://ec.europa.eu/eurostat/statistics-explained/index.php/Government_finance_statistics


If you download the document it should show you the actual numbers in billions and trillions.

The EU28 are all the countries in the EU (including the UK in this particular calculation). The EU19 are the 19 countries of the eurozone.

You realize this proposal does nothing to address flaws in GDP.

Its more a form of censorship. Similar to how internet search results and news media scrub statistics for how many trillions the EU is currently in debt. Its easy to find the US deficit in trillions. Try to find the same stat for the EU and there is a mysterious censorship blackout in effect.

The EU-28’s government deficit-to-GDP ratio decreased from -1.0 % in 2017 to -0.7 % in 2018, while this ratio also decreased in the EA-19 from -0.9 % to -0.5 %. Both in the EU-28 and EA-19, the general government deficit was the lowest in the available time series. Fourteen EU Member States — Luxembourg (+2.7 %), Malta and Germany (both +1.9 %), Bulgaria (+1.8 %), the Netherlands (+1.5 %), Czechia (+1.1 %), Greece (+1.0 %), Sweden, Denmark and Slovenia (all +0.8 %), Lithuania (+0.6 %), Croatia (+0.3 %), Austria (+0.2 %) and Ireland (+0.1 %) — registered government surpluses in 2018.

There were 12 EU Member States, namely Poland, Portugal, Estonia, Latvia, Belgium, Finland, Slovakia, Italy, Hungary, the United Kingdom, France and Spain, that recorded deficits in 2018 that were smaller than 3.0 % of GDP.

Two Member States had deficit equal to or higher than 3.0 % of GDP: Romania (-3.0 %) and Cyprus (-4.4 %) (see Figure 1). The high deficit for Cyprus in 2018 is mainly due to the impact from the restructuring of the Cyprus Cooperative Bank Ltd (CCB) - the sale of the good parts of CCB and the subsequent integration of the remaining public financial defeasance structure into general government accounts.

They're not feeble-minded. Just pointing out that GDP is flawed and can be manipulated. We've only been obsessed with GDP since the 1960's - prior to that people had other methods of judging whether an economy was doing well. For example, if your tax rates stay steady from year to year, but tax receipts fall, then the economy is doing badly no matter what GDP says.

These problems are basically self-solving problems. People think that we should stop it before it is too late but it will stop even if it is too late, just not with humanity. For example, the world is going into a climate change right now right? Do you really think world will stop because all humans die?

That's not my reading of what he said. It's more about the fact that GDP doesn't reflect "the big picture": living standards, inequality, environmental issues. Only looking at GDP makes everything about achieving growth at any cost.

How would this be closing doors, ending opportunities?

I don't really get the point of this part of the quote, since those things are only factors that might potentially affect the economy and it isn't as though this is the first time in the history of economics that there's been severe unrest, disasters, and everything else happening.  There are always things going on that might affect a country's economy, but good luck trying to measure the impact before the effect happens.

So this is one economist blabbering on about some iconoclastic, paradigm-shifting lunacy.  The man probably deserves some respect for his accomplishments, but I trust the academic community will be the best judge of whether to listen to his suggestions, much like what happens in the scientific community.  There are well-known scientists who don't believe the HIV virus exists and have said as much, but that line of thinking hasn't exactly gone mainstream.  True knowledge will (hopefully) always prevail.

GDP is on the upswing, yet Los Angeles burns regularly, and the U.S. president faces impeachment.

It appears people of the world are too feeble minded and uneducated to understand GDP. And so the powers that be are calling for GDP numbers to become obsolescent, so that we feeble minded do not injure ourselves attempting to make sense of GDP.

This is strikingly similar to americans being denied access to ICOs, access to leveraged crypto based trading platforms like bitmex, crypto ETFs and other innovations. Everywhere throughout the world, opportunities and options are being denied to some demographics. Doors are being closed. What's the reason for this, do you support it? How do people interpret the motive behind these policies?

It appears people of the world are too feeble minded and uneducated to understand GDP. And so the powers that be are calling for GDP numbers to become obsolescent, so that we feeble minded do not injure ourselves attempting to make sense of GDP.

 

Nobel-winning economist Joseph Stiglitz would like gross domestic product (GDP) to go the way of the pyramid inch and the Arabic mile. “The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy,” he writes. “Yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem.” He’s right! In the United States, GDP is on the upswing, yet Los Angeles burns regularly, and the U.S. president faces impeachment.

The problem, he says, is that politicians see positive GDP figures and continue with the status quo. GDP gives no hint of environmental degradation or resource depletion, nor inequality, middle-class suffering, or lower standards of living. “If growth is not sustainable because we are destroying the environment and using up scarce natural resources our statistics should warn us,” he says. “It is clear that something is fundamentally wrong with the way we assess economic performance and social performance.” Preach.

His new book, Measuring What Counts: The Global Movement for Well-Being, cowritten with French economists Jean-Paul Fitoussi and Martine Durand, provides a blueprint for how countries can use more appropriate metrics that account for details such as sustainability and—imagine!—how people feel about their lives.

This all began a decade ago, when Nicolas Sarkozy, then the president of France, asked Stiglitz and fellow Nobel winner Amartya Sen, along with Fitoussi, to set up a commission studying GDP. They published their early deliberations in a book called Mismeasuring Our Lives.

From an economist’s perspective, metrics are the key to everything. “If we measure the wrong thing, we will do the wrong thing,” writes Stiglitz.


https://www.fastcompany.com/90435788/a-nobel-winning-economist-says-its-time-to-kill-the-gdp