3 ms·

I don't even think that it is only the non-traded sectors (e.g. Wikipedia, Facebook, online dating) where we've gained massive utility that is not tracked in GD

I don't even think that it is only the non-traded sectors (e.g. Wikipedia, Facebook, online dating) where we've gained massive utility that is not tracked in GDP. Consider medicine. In the official statistics, medicine drastically drags down (real) GDP by contributing heavily to inflation. But I propose that medicine has suffered deflation which is just not captured by existing inflation measurements. Note that absolutely no hedonic adjustment is applied to medical costs in official statistics - if we move from dying a painful death (cost $10) to taking a magic pill that solves all the problems (cost $100), that's treated as 900% inflation. Ask yourself - 1970 medicine at 1970 prices (i.e. you can't use anything that reached the market in 1971 or later), or 2015 medicine at 2015 prices. If you choose the latter then medicine has suffered deflation. It's a very interesting exercise to re-compute standard statistics based on CPI measures which simply exclude medical inflation (let alone recognize deflation).

jack9 11y ago
> non-traded sectors (e.g. Wikipedia, Facebook, online dating) where we've gained massive utility that is not tracked in GDP. The GDP is overestimated (but not because of the non-traded sectors). Remember 2013 when the fed needed to show some...ANY... growth? Start the padding! - http://seekingalpha.com/article/1368001-u-s-governments-new-way-of-calculating-gdp http://seekingalpha.com/article/1368001-u-s-governments-new-... - Which almost every administration has been doing in their own way, since Nixon. But Commissions, legal bills and expenditures on real estate transactions are included in GDP? Our GDP has been in a negative slide for awhile. The Fracking miracle was a light in the tunnel, but steel is dead, cars are dead, aerospace is dead (in the context of the US GDP).
- jazzyk 11y ago
  The manipulation of government-published data is not specific to Democrats or Republicans, and seems to be getting more and more shameless: 1. "Seasonal adjustment". This year, the 1st quarter GDP had to be 'seasonally adjusted' TWICE to finally show (meager) positive growth, instead of initially reported contraction. 2. The inflation rate used by the government to calculate the GDP is unrealistically low. It is debatable how much higher real inflation is, but most independent ( and supported by numbers) analyses I have seen typically estimate inflation rate to be at least 3-4 percent higher than the one reported. If the real inflation rate were to be used to calculate the GDP, there would be no or negative growth. 3. In 70% or 80% of cases, the initial, headline-grabbing news are later revised lower and published quietly (usually Fri afternoon) http://www.cnbc.com/2015/07/30/us-government-revises-earlier-gdps-to-fix-anomalies-in-reporting.html http://www.cnbc.com/2015/07/30/us-government-revises-earlier... TL;DR: We need non-government, independent economic agencies to calculate vital economic growth indicators.
  - Symmetry 11y ago
    Speaking of official versus independantly measured inflation data, the CPI is actually matching up with the Billion Prices Project pretty well. http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/ I'm not sure why you think seasonal adjustment is such a big deal since the pluses and minuses are conserved - it can't have any effect on year over year GDP figures.
  - ArkyBeagle 11y ago
    Absolutely. The present band of Market Monetarists heretics think an "official" NDGP futures market would be a move in this direction. But one side effect of this is that inflation* as a regulatory concept becomes much more deprecated. That's a big change. It is not clear to me that there is any inflation at all, but I tend to avoid trendy goods and I don't live ( by design ) in high-rent areas. *even though RGDP+inflation=NGDP. My bias in this is that RGDP & inflation look like an unstable control input where NGDP does not ( I believe this is because of lag ) . "Should control theory be applied to the economy at all" is a very good question.
mamon 11y ago
Funny fact: in European Union there had been recently passed the law that mandates that estimated value of prostitution and drug dealing (among others) is included in GDP calculations. That came from desperate need of EU to make GDP stats look better.
dredmorbius 11y ago
The problem with medicine as a case of providi g vastly more utility is that it hasn't. And most of the improvement has come from old and largely public intervenion not acute, intensive, personal treatments. Most healthcare improvements, in the sense of longevity and mortality, came prior to 1920 or so, from municipal fresh water, sewerage, waste collection, improved nutrition, and public health methods (infectious disease controls and quarantines) and antisceptic and anesthetic advances. Antibiotics and vaccines, among other advances, have ddone far less than these. Even the advances since the 1970s are far more raising health standards among the least healthy, particularly minority men and women, than raising the life expectency of the best-served parts of the population. Most medical expenses (nearly 15% of U.S. GDP) are simply not productive.
- yummyfajitas 11y ago
  I agree that the bigger gains came from non-medical interventions and basic medicine. I also believe a lot of medicine is wasted. In spite of this, I'd choose 2015 medicine at 2015 prices. I personally find walking, sitting, sex positions other than girl on top, and various more vigorous activities, to be a lot of fun. In 1970 those things probably wouldn't be available to me. It's definitely worth the $3k or so I paid in India for it and it'd be worth it at $1M. Would you give up 1971+ medicine if you could pay 1970 prices?
  - dredmorbius 11y ago
    Almost definitely, yes I would. 1970 medicine, at 1970 prices, available to all, would do far more than all medical gains since. The main concern I see is that AIDS would be subject to only epidemiological treatment. No antiretrovirals.

jack9 11y ago

> non-traded sectors (e.g. Wikipedia, Facebook, online dating) where we've gained massive utility that is not tracked in GDP. The GDP is overestimated (but not because of the non-traded sectors). Remember 2013 when the fed needed to show some...ANY... growth? Start the padding! - http://seekingalpha.com/article/1368001-u-s-governments-new-way-of-calculating-gdp http://seekingalpha.com/article/1368001-u-s-governments-new-... - Which almost every administration has been doing in their own way, since Nixon. But Commissions, legal bills and expenditures on real estate transactions are included in GDP? Our GDP has been in a negative slide for awhile. The Fracking miracle was a light in the tunnel, but steel is dead, cars are dead, aerospace is dead (in the context of the US GDP).

jazzyk 11y ago
The manipulation of government-published data is not specific to Democrats or Republicans, and seems to be getting more and more shameless: 1. "Seasonal adjustment". This year, the 1st quarter GDP had to be 'seasonally adjusted' TWICE to finally show (meager) positive growth, instead of initially reported contraction. 2. The inflation rate used by the government to calculate the GDP is unrealistically low. It is debatable how much higher real inflation is, but most independent ( and supported by numbers) analyses I have seen typically estimate inflation rate to be at least 3-4 percent higher than the one reported. If the real inflation rate were to be used to calculate the GDP, there would be no or negative growth. 3. In 70% or 80% of cases, the initial, headline-grabbing news are later revised lower and published quietly (usually Fri afternoon) http://www.cnbc.com/2015/07/30/us-government-revises-earlier-gdps-to-fix-anomalies-in-reporting.html http://www.cnbc.com/2015/07/30/us-government-revises-earlier... TL;DR: We need non-government, independent economic agencies to calculate vital economic growth indicators.
- Symmetry 11y ago
  Speaking of official versus independantly measured inflation data, the CPI is actually matching up with the Billion Prices Project pretty well. http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/ I'm not sure why you think seasonal adjustment is such a big deal since the pluses and minuses are conserved - it can't have any effect on year over year GDP figures.
- ArkyBeagle 11y ago
  Absolutely. The present band of Market Monetarists heretics think an "official" NDGP futures market would be a move in this direction. But one side effect of this is that inflation* as a regulatory concept becomes much more deprecated. That's a big change. It is not clear to me that there is any inflation at all, but I tend to avoid trendy goods and I don't live ( by design ) in high-rent areas. *even though RGDP+inflation=NGDP. My bias in this is that RGDP & inflation look like an unstable control input where NGDP does not ( I believe this is because of lag ) . "Should control theory be applied to the economy at all" is a very good question.

mamon 11y ago

Funny fact: in European Union there had been recently passed the law that mandates that estimated value of prostitution and drug dealing (among others) is included in GDP calculations. That came from desperate need of EU to make GDP stats look better.

dredmorbius 11y ago

The problem with medicine as a case of providi g vastly more utility is that it hasn't. And most of the improvement has come from old and largely public intervenion not acute, intensive, personal treatments. Most healthcare improvements, in the sense of longevity and mortality, came prior to 1920 or so, from municipal fresh water, sewerage, waste collection, improved nutrition, and public health methods (infectious disease controls and quarantines) and antisceptic and anesthetic advances. Antibiotics and vaccines, among other advances, have ddone far less than these. Even the advances since the 1970s are far more raising health standards among the least healthy, particularly minority men and women, than raising the life expectency of the best-served parts of the population. Most medical expenses (nearly 15% of U.S. GDP) are simply not productive.

yummyfajitas 11y ago
I agree that the bigger gains came from non-medical interventions and basic medicine. I also believe a lot of medicine is wasted. In spite of this, I'd choose 2015 medicine at 2015 prices. I personally find walking, sitting, sex positions other than girl on top, and various more vigorous activities, to be a lot of fun. In 1970 those things probably wouldn't be available to me. It's definitely worth the $3k or so I paid in India for it and it'd be worth it at $1M. Would you give up 1971+ medicine if you could pay 1970 prices?
- dredmorbius 11y ago
  Almost definitely, yes I would. 1970 medicine, at 1970 prices, available to all, would do far more than all medical gains since. The main concern I see is that AIDS would be subject to only epidemiological treatment. No antiretrovirals.