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In response to point 5. Is it clear that per capita GDP is a good measure of standard of living? Adjusted median income has not risen much with GDP. Do you have

by Benjo 16y ago

In response to point 5. Is it clear that per capita GDP is a good measure of standard of living? Adjusted median income has not risen much with GDP. Do you have an argument for why standard of living should be evaluated as a mean instead of a median? http://www.stanford.edu/class/polisci120a/immigration/Median%20Household%20Income.pdf http://www.stanford.edu/class/polisci120a/immigration/Median...

john_horton 16y ago
There are lots of different moments & quantiles of the income distribution that are interesting and useful to look at, but its not like the mean is terribly misleading here. In the plot you provide, median income in real dollars has increased from 25K in 1950 to 40K in 1990---a 70% increase in real income.
SHOwnsYou 16y ago
> Is it clear that per capita GDP is a good measure of standard of living? Yes. This is something else virtually every economist will agree on. ACists, neoclassical, keynesian, Chicago, Austrian, I'm sure there are other major schools I'm forgetting, but this is a very accepted measure of standard of living in the field of economics.
- aloneinkyoto 16y ago
  > Yes. This is something else virtually every economist will agree on. A statement which only help to make his point about economists being ignorant crocks. GDP is heavily doubted as a good measure of standard of living in all other social sciences. Examples of what the GDP measure fails to take into account: ecological sustainability, wealth distribution, non-market transactions, underground economy, non-monetary economy, subsistence economy, quality improvements and inclusion of new products, what is being produced, externalities, sustainability, etc, etc... http://en.wikipedia.org/wiki/Gross_domestic_product#Limitations_of_GDP_to_judge_the_health_of_an_economy http://en.wikipedia.org/wiki/Gross_domestic_product#Limitati...
  - SHOwnsYou 16y ago
    I don't understand your argument here. You won't find an economist (or any other person person) in the world that thinks GDP exhaustively covers every aspect of an economy and how it provides a standard of living. What you will find is that they all agree GDP is the best available measure to determine a standard of living that is derived from some level of economic production. If GDP is a terrible metric for determining standard of living, I'd like to know why it is still the most often used metric (by economists and non-economists alike) and a coherent argument for some alternative standard. Any satisfaction based metric means that the majority of the developed world is doing something wrong -- numerous happiness studies show indigenous peoples often have a higher "happiness index" than people in the developed world. Environmental based metrics have their own problems because environmental benefits and harms are not internalized by nations. Income distribution based metrics aren't acceptable because the harms of great income distribution disparity are not easily mapped and are rarely agreed upon. The only thing that might make sense is a metric based on life expectancy and education (Human development index from your Wikipedia link), but even that is problematic. Research created free-riding, regardless of patents. The second a US company makes a drug that eliminates cancer, any lab that gets their hand on the drug can reverse engineer it with ease. The however many millions of dollars that went into building it (and become a function of its cost) are undercut by countries/people that do not respect the intellectual property rights of such a patent. The outlay of spending becomes highly concentrated while the company doesn't see the returns that it expects. The drug copier gets the benefits of the hundreds of millions in R&D expenditure while only spending a few extra days of a scientists time.
    - aloneinkyoto 16y ago
      The reason why GDP is still used is because we have a lot of historical GDP data available and it is a fairly simple measure to understand and collect data on. Nor do we have a good enough alternative measure yet. We do have several candidates, but just as you state they all have weaknesses that needs to be understood. The problem with economic sciences is that the GDP measure is used without critique, without fully understanding its trade-offs or by simply ignoring it deficiencies. That I believe is very careless when you are in the end dealing with the lives of real people.

by Benjo 16y ago

john_horton 16y ago

There are lots of different moments & quantiles of the income distribution that are interesting and useful to look at, but its not like the mean is terribly misleading here. In the plot you provide, median income in real dollars has increased from 25K in 1950 to 40K in 1990---a 70% increase in real income.

SHOwnsYou 16y ago

> Is it clear that per capita GDP is a good measure of standard of living? Yes. This is something else virtually every economist will agree on. ACists, neoclassical, keynesian, Chicago, Austrian, I'm sure there are other major schools I'm forgetting, but this is a very accepted measure of standard of living in the field of economics.

aloneinkyoto 16y ago
> Yes. This is something else virtually every economist will agree on. A statement which only help to make his point about economists being ignorant crocks. GDP is heavily doubted as a good measure of standard of living in all other social sciences. Examples of what the GDP measure fails to take into account: ecological sustainability, wealth distribution, non-market transactions, underground economy, non-monetary economy, subsistence economy, quality improvements and inclusion of new products, what is being produced, externalities, sustainability, etc, etc... http://en.wikipedia.org/wiki/Gross_domestic_product#Limitations_of_GDP_to_judge_the_health_of_an_economy http://en.wikipedia.org/wiki/Gross_domestic_product#Limitati...
- SHOwnsYou 16y ago
  I don't understand your argument here. You won't find an economist (or any other person person) in the world that thinks GDP exhaustively covers every aspect of an economy and how it provides a standard of living. What you will find is that they all agree GDP is the best available measure to determine a standard of living that is derived from some level of economic production. If GDP is a terrible metric for determining standard of living, I'd like to know why it is still the most often used metric (by economists and non-economists alike) and a coherent argument for some alternative standard. Any satisfaction based metric means that the majority of the developed world is doing something wrong -- numerous happiness studies show indigenous peoples often have a higher "happiness index" than people in the developed world. Environmental based metrics have their own problems because environmental benefits and harms are not internalized by nations. Income distribution based metrics aren't acceptable because the harms of great income distribution disparity are not easily mapped and are rarely agreed upon. The only thing that might make sense is a metric based on life expectancy and education (Human development index from your Wikipedia link), but even that is problematic. Research created free-riding, regardless of patents. The second a US company makes a drug that eliminates cancer, any lab that gets their hand on the drug can reverse engineer it with ease. The however many millions of dollars that went into building it (and become a function of its cost) are undercut by countries/people that do not respect the intellectual property rights of such a patent. The outlay of spending becomes highly concentrated while the company doesn't see the returns that it expects. The drug copier gets the benefits of the hundreds of millions in R&D expenditure while only spending a few extra days of a scientists time.
  - aloneinkyoto 16y ago
    The reason why GDP is still used is because we have a lot of historical GDP data available and it is a fairly simple measure to understand and collect data on. Nor do we have a good enough alternative measure yet. We do have several candidates, but just as you state they all have weaknesses that needs to be understood. The problem with economic sciences is that the GDP measure is used without critique, without fully understanding its trade-offs or by simply ignoring it deficiencies. That I believe is very careless when you are in the end dealing with the lives of real people.