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If I own a house (outright) and live in it, I pay nothing, and no impact on GDP If my neighbour owns a house (outright) and lives in it, I pay nothing, and no

If I own a house (outright) and live in it, I pay nothing, and no impact on GDP If my neighbour owns a house (outright) and lives in it, I pay nothing, and no impact on GDP If I rent from my neighbour for $10k a year, and he rents from me for $10k a year, GDP increases by $20k a year, but nothing has really changed, expect the amount of money paid in taxes. So that's why you have imputed rent as part of GDP. Fine, I get that. How about this scenario I have a kid and look after it, I pay nothing, and no impact on GDP My neighbour has a kid and looks after it, he pays nothing, and no impact on GDP I look after my neighbours kid 3 days a week and he looks after mine, in an exchange, no impact on GDP I look after my neighbours kid 3 days a week and he pays me $300, and he looks after mine 3 days a week and I pay him $300. GDP increases $600 a week, and more money is taken in taxes. Do we include all unpaid work? If I (a painter) pay my neighbor (a gardener) to garden my front yard and he pays me to paint his garage, then GDP increases. If I do the gardening myself, and he does the painting himself, GDP doesn't increase. How about me looking after my old parent vs me working overtime and paying a care home to do it?

epups 3y ago
The GDP is a measure of economic activity, meaning the exchange of money for products or services. Of course there are activities, such as the ones you describe, that will not be accounted because they are done for free or in exchange for something else. > How about me looking after my old parent vs me working overtime and paying a care home to do it? Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money.
- brvsft 3y ago
  The point is that the country is no wealthier in either scenario, yet people use GDP as a proxy for the productive output and wealth of a country.
  - epups 3y ago
    But the country is wealthier in the scenario where you produced and sourced more labor for money. Arguably more productive too, because you expanded the pool of labor when you worked more hours, which your employer (presumably) transformed into more money.
    - MichaelZuo 3y ago
      Can you explain how? If someone is paid to dig holes and fill them up right after, the country is not any wealthier even though GDP is increased, in fact slightly less wealthy because of wear and tear on the shovel/excavator.
      - antisthenes 3y ago
        GPD is an estimate that relies on most people being rational. A company that pays contractors to do nothing but dig up holes and fill them back up again will quickly go bankrupt, so most people aren't going to engage in such enterprise. Just because you found a way to hack the GDP in an online argument doesn't immediately throw its usefulness in the real-world.
        MichaelZuo 3y ago
        Repeatedly digging up the same place is a relatively common real world scenario, such as when multiple utilities need to be installed or repaired on the same stretch of ground. e.g. repairing a water main, then laying some underground electrical cables, then laying some fiber optic wire. Due to inefficient coordination, country A may have the same patch of ground dug up and filled three times. Whereas country B, more efficient, only has to dig once, do all the work, then fill it up once. So country B records lower GDP but in fact ends up slightly wealthier.
        antisthenes 3y ago
        I certainly agree that different countries will not only have different levels of efficiency, but also different accuracies in their GDP measurement. Shadow economies also exist and comprise different % in different countries.
- iso1631 3y ago
  > Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money. I neglected to mention I work in an old peoples home. The overtime is the exact amount of care my parent needs.
Aerbil313 3y ago
Two economists were walking down the street. One saw a dog s*t on the ground, and told the other: “If you eat that, I’ll give you thousand dollars.” Other guy looked at it, thought “It’s bad, but I’ll get $1000”, and ate it. His friend paid him, although he still regretted it because it was really bad. After some time, they encountered another dog s*t. This time the guy who ate it before offered $1000 for eating it to his friend. He accepted, thinking “I’ll gain the $1000 I lost”. He ate it and got paid. After some time, they stopped for a while, and one said to other, “I feel like we just ate dog s*t for nothing”, the other replied “Oh, come on! We just contributed to the GDP by $2000, it was not for nothing!”
- deleted 3y ago
  [deleted]
- s1artibartfast 3y ago
  Makes sense. GDP captures money spent on services, not philosophical judgment on if that money was wisely spent or produced net happiness. In a more realistic examples, alcoholics purchasing booze, obese people overeating, and people wasting their lives watching TV all contribute to GDP.
csomar 3y ago
> If I rent from my neighbour for $10k a year, and he rents from me for $10k a year, GDP increases by $20k a year, but nothing has really changed, expect the amount of money paid in taxes. Not really because even if you are living in your own paid-off house, the rent will be added to the GDP. > If I do the gardening myself, and he does the painting himself, GDP doesn't increase. There is a law being worked out somewhere (probably Europe) that will tax any activity you are doing. If you paint your garage, this activity will be evaluated financially and you'll have to pay taxes on it. Not doing so is tax evasion. * last one was /s but maybe not really?
- swader999 3y ago
  Along with the surveillance to make it practicable.
- engcoach 3y ago
  > There is a law being worked out somewhere (probably Europe) that will tax any activity you are doing. If you paint your garage, this activity will be evaluated financially and you'll have to pay taxes on it. Not doing so is tax evasion. New feudalism
febusravenga 3y ago
> If I do the gardening myself, and he does the painting himself, GDP doesn't increase. But capital increase. Next time this capital will hit market - when you decide to sell fruits or home with beautiful garden it will be taxed and will increase GDP. GDP is statistics anyway, so any work that doesn't rot and hit the market will eventually show up in GDP.
Aunche 3y ago
> If I own a house (outright) and live in it, I pay nothing, and no impact on GDP This is not true, at least in the US. If you're a homeowner, they estimate how much it would cost to rent your own home and include that in the GDP. https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent
- iso1631 3y ago
  You snipped the following line > So that's why you have imputed rent as part of GDP. Fine, I get that. I then came up with other parts where economic activity is not imputed

epups 3y ago

The GDP is a measure of economic activity, meaning the exchange of money for products or services. Of course there are activities, such as the ones you describe, that will not be accounted because they are done for free or in exchange for something else. > How about me looking after my old parent vs me working overtime and paying a care home to do it? Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money.

brvsft 3y ago
The point is that the country is no wealthier in either scenario, yet people use GDP as a proxy for the productive output and wealth of a country.
- epups 3y ago
  But the country is wealthier in the scenario where you produced and sourced more labor for money. Arguably more productive too, because you expanded the pool of labor when you worked more hours, which your employer (presumably) transformed into more money.
  - MichaelZuo 3y ago
    Can you explain how? If someone is paid to dig holes and fill them up right after, the country is not any wealthier even though GDP is increased, in fact slightly less wealthy because of wear and tear on the shovel/excavator.
    - antisthenes 3y ago
      GPD is an estimate that relies on most people being rational. A company that pays contractors to do nothing but dig up holes and fill them back up again will quickly go bankrupt, so most people aren't going to engage in such enterprise. Just because you found a way to hack the GDP in an online argument doesn't immediately throw its usefulness in the real-world.
      - MichaelZuo 3y ago
        Repeatedly digging up the same place is a relatively common real world scenario, such as when multiple utilities need to be installed or repaired on the same stretch of ground. e.g. repairing a water main, then laying some underground electrical cables, then laying some fiber optic wire. Due to inefficient coordination, country A may have the same patch of ground dug up and filled three times. Whereas country B, more efficient, only has to dig once, do all the work, then fill it up once. So country B records lower GDP but in fact ends up slightly wealthier.
        antisthenes 3y ago
        I certainly agree that different countries will not only have different levels of efficiency, but also different accuracies in their GDP measurement. Shadow economies also exist and comprise different % in different countries.
iso1631 3y ago
> Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money. I neglected to mention I work in an old peoples home. The overtime is the exact amount of care my parent needs.

Aerbil313 3y ago

Two economists were walking down the street. One saw a dog s*t on the ground, and told the other: “If you eat that, I’ll give you thousand dollars.” Other guy looked at it, thought “It’s bad, but I’ll get $1000”, and ate it. His friend paid him, although he still regretted it because it was really bad. After some time, they encountered another dog s*t. This time the guy who ate it before offered $1000 for eating it to his friend. He accepted, thinking “I’ll gain the $1000 I lost”. He ate it and got paid. After some time, they stopped for a while, and one said to other, “I feel like we just ate dog s*t for nothing”, the other replied “Oh, come on! We just contributed to the GDP by $2000, it was not for nothing!”

deleted 3y ago
[deleted]
s1artibartfast 3y ago
Makes sense. GDP captures money spent on services, not philosophical judgment on if that money was wisely spent or produced net happiness. In a more realistic examples, alcoholics purchasing booze, obese people overeating, and people wasting their lives watching TV all contribute to GDP.

csomar 3y ago

> If I rent from my neighbour for $10k a year, and he rents from me for $10k a year, GDP increases by $20k a year, but nothing has really changed, expect the amount of money paid in taxes. Not really because even if you are living in your own paid-off house, the rent will be added to the GDP. > If I do the gardening myself, and he does the painting himself, GDP doesn't increase. There is a law being worked out somewhere (probably Europe) that will tax any activity you are doing. If you paint your garage, this activity will be evaluated financially and you'll have to pay taxes on it. Not doing so is tax evasion. * last one was /s but maybe not really?

swader999 3y ago
Along with the surveillance to make it practicable.
engcoach 3y ago
> There is a law being worked out somewhere (probably Europe) that will tax any activity you are doing. If you paint your garage, this activity will be evaluated financially and you'll have to pay taxes on it. Not doing so is tax evasion. New feudalism

febusravenga 3y ago

> If I do the gardening myself, and he does the painting himself, GDP doesn't increase. But capital increase. Next time this capital will hit market - when you decide to sell fruits or home with beautiful garden it will be taxed and will increase GDP. GDP is statistics anyway, so any work that doesn't rot and hit the market will eventually show up in GDP.

Aunche 3y ago

> If I own a house (outright) and live in it, I pay nothing, and no impact on GDP This is not true, at least in the US. If you're a homeowner, they estimate how much it would cost to rent your own home and include that in the GDP. https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent

iso1631 3y ago
You snipped the following line > So that's why you have imputed rent as part of GDP. Fine, I get that. I then came up with other parts where economic activity is not imputed