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GDP is a terrible metric. It encodes all sorts of micro-regressions as growth. For instance, a hostile society induces more people to live alone; They purchase

GDP is a terrible metric. It encodes all sorts of micro-regressions as growth. For instance, a hostile society induces more people to live alone; They purchase a new everything. GDP goes up but utilization goes down. If it was our own business we'd fix it. When it's our society we're too busy clawing after that newly minted GDP.

randyrand 10y ago
Your example doesn't really prove to me that GDP is a terrible metric for economic growth. Not perfect, sure. But also better than any other metric I know of.
- tunesmith 10y ago
  What's more interesting is to think of another metric - one that doesn't calculate economic growth differently, but measures something else entirely that isn't so built around economic growth. Depends on what you want to maximize, though. Income equality? Planet health? Life expectancy? Some sort of happiness index? Probability of becoming an interstellar species?
  - randyrand 10y ago
    Interestingly, all those other metrics you listed are very tied to GDP and economic growth, which means GDP growth is a decent measure for all those other measures. Maximizing one is not the answer. We want to maximize all of them. And in that sense GDP is a great measure since it impacts all of them greatly. Even sustainability is linked to GDP growth. Green technologies are typically the most expensive, and we need growth so that we can one day afford them across the board.
- MawNicker 10y ago
  I specifically didn't reference the psychological effects that are also a huge problem. Those just have to be assumed by reasonable humans. Hostility creates material problems that we can actually analyze. We can form metrics for the utilization of goods and calculate their actual value to the human's that buy them. It's just a lot more complicated. Businesses do these sorts of things for themselves internally. They're not as deterministic as GDP is. The models change slightly over time. The signal gets noisy. GDP is easier to optimize against for this reason. It isn't jumping around when we're standing still. We know when we're actually moving. We don't know where but it's better than noise. We think. Besides, no one has proven that GDP is a terrible metric. That and these other systems are just so complicated... How do you ever know if they're "right"? You win. As in beat the market. Nobody is winning on behalf of the government. They're too busy winning elsewhere.

randyrand 10y ago

Your example doesn't really prove to me that GDP is a terrible metric for economic growth. Not perfect, sure. But also better than any other metric I know of.

tunesmith 10y ago
What's more interesting is to think of another metric - one that doesn't calculate economic growth differently, but measures something else entirely that isn't so built around economic growth. Depends on what you want to maximize, though. Income equality? Planet health? Life expectancy? Some sort of happiness index? Probability of becoming an interstellar species?
- randyrand 10y ago
  Interestingly, all those other metrics you listed are very tied to GDP and economic growth, which means GDP growth is a decent measure for all those other measures. Maximizing one is not the answer. We want to maximize all of them. And in that sense GDP is a great measure since it impacts all of them greatly. Even sustainability is linked to GDP growth. Green technologies are typically the most expensive, and we need growth so that we can one day afford them across the board.
MawNicker 10y ago
I specifically didn't reference the psychological effects that are also a huge problem. Those just have to be assumed by reasonable humans. Hostility creates material problems that we can actually analyze. We can form metrics for the utilization of goods and calculate their actual value to the human's that buy them. It's just a lot more complicated. Businesses do these sorts of things for themselves internally. They're not as deterministic as GDP is. The models change slightly over time. The signal gets noisy. GDP is easier to optimize against for this reason. It isn't jumping around when we're standing still. We know when we're actually moving. We don't know where but it's better than noise. We think. Besides, no one has proven that GDP is a terrible metric. That and these other systems are just so complicated... How do you ever know if they're "right"? You win. As in beat the market. Nobody is winning on behalf of the government. They're too busy winning elsewhere.