Economic indicators, useful or meaningless?

cepheus

Why isn't household work & cooking (the sort you perform for yourself or family) used to gauge productivity? How about writing a Wikipedia entry?

Why aren't property and stock market prices used when calculating inflation?

Are all these arbitrary measures governed by political considerations? In whose interest do we ignore them, and do they show economics for what it is, a pseudo-science?

CLAPTON

gdp was an invention of an American secretary of state in the 1930s to give some sort of idea about national output


a cult quickly built up around it in places called 'universities' where they started to worship it via special 'university courses'


now the god 'gdp' is worshipped in governments, newspapers, media business 'leaders' etc


many know it's a false god but their jobs and income dependent upon maintaining the appearances so the cult grows


the false god is even used to justify staying in the EU and maintaining large fluxes of population migration but then religious dogma has always been misused

princeofpounds

As someone who uses these figures in their profession, I am often surprised by how much importance is given to certain aspects of them. They are often collected by non-impartial governments, with frequent statistic methodology changes, with surprises on the upside or downside often within the margin of error, and frequently revised in after subsequent releases.


Having said that, they are not useless. There is a lot of use in understanding whether the economy is broadly weak, neutral or strong, and you need some type of statistic to do that. And our statistics do a decent job of this basic function and a bit more beyond that.


Economies are also insanely complex - so to expect a statistic to do too much is also a mistake.

antrobus

cepheus wrote: »

Why isn't household work & cooking (the sort you perform for yourself or family) used to gauge productivity? .....

The daily grind of British housewives and husbands who toil away with no financial reward is at last to be officially recognised.

The Office for National Statistics (ONS) has revealed it is calculating a figure to show how much unpaid work such as cleaning, ironing and doing the school run contributes to the economy.


http://www.telegraph.co.uk/news/uknews/11234123/Household-chores-to-be-given-economic-value.html

cepheus wrote: »

....How about writing a Wikipedia entry?.......

Don't know. I imagine it depends on whether you think Wikipedia has any economic value. Perhaps if you'd bothered to read the Wiki entry on the 'Valuation of Nonmarket Housework' it would be easier for you to argue that it did have some value.:)

https://en.wikipedia.org/wiki/Valuation_of_Nonmarket_Housework

cepheus wrote: »

...Why aren't property and stock market prices used when calculating inflation? ...

Property prices will affect the calculation of CPIH which is a measure of inflation. But, in general, you would need to understand the difference between capital and income to see why they are not.

cepheus wrote: »

...Are all these arbitrary measures governed by political considerations? In whose interest do we ignore them,...

Quite possibly. There are a number of left-wing progressive types who bang on about the importance of 'affordable childcare provision' and how it enables women to go and work and contribute to the economy. Think how embarassing it would be for them to discover that, by including the value of unpaid housework, such measures actually had a nil or negative affect on GDP.

cepheus wrote: »

...and do they show economics for what it is, a pseudo-science?

Economics is a "pseudo-science" when it produces answers that you find politically unacceptable.

antrobus

CLAPTON wrote: »

gdp was an invention of an American secretary of state in the 1930s to give some sort of idea about national output....

It is often said that Simon Kuznets invented GDP in the 1930s. He wasn't the "American secretary of state" - in the US the Secretary of State is their equivalent of our Foreign Secretary - and he did not invent GDP, although he was an economist who did a lot of work on national income statistics and got a Nobel prize for it.

http://asociologist.com/2013/11/19/dear-new-yorker-kuznets-did-not-invent-gdp-and-that-matters/

It has been claimed that GDP was really invented by that man Keynes.
https://timnovate.wordpress.com/2009/02/22/the-man-who-invented-gdp/

michaels

I agree with the OP, better to have no numbers at all and allow the politicians to tell us how well the economy is doing than a figure that is open to interpretation and statistical innacuracy.

Thrugelmir

michaels wrote: »

allow the politicians to tell us how well the economy is doing

:rotfl::rotfl::rotfl::rotfl::rotfl:

You cannot be serious.

Recent history tells us that politicians are the last people to trust with the economy.

Generali

cepheus wrote: »

Why isn't household work & cooking (the sort you perform for yourself or family) used to gauge productivity? How about writing a Wikipedia entry?

Why aren't property and stock market prices used when calculating inflation?

Are all these arbitrary measures governed by political considerations? In whose interest do we ignore them, and do they show economics for what it is, a pseudo-science?

It's not a secret that GDP is a deeply flawed proxy for output and economics doesn't claim to be a science, it's a social science.

FWIW, I think that economics is very good at describing why things are the way they are and as a tool for looking at history. It's lousy as a predictor but people think that they can become rich or powerful by (mis)using it in that way.

As for official statistics, they are as good as the inputs used and the outputs requested by political masters. The shenanigans with the unemployment figures in the 80s spring to mind. That's not the fault of economics or statisticians, it's the fault of politicians.

It's like the way that everyone has gotten hung up with waiting lists for the last 20 years on the NHS so that has become a primary measure of success. What happens as a result? People die before they get on the waiting list.

michaels

antrobus wrote: »

Quite possibly. There are a number of left-wing progressive types who bang on about the importance of 'affordable childcare provision' and how it enables women to go and work and contribute to the economy. Think how embarassing it would be for them to discover that, by including the value of unpaid housework, such measures actually had a nil or negative affect on GDP.

Excellent idea, we could ban people from looking after their own children, cooking their own food and cleaning their own houses then we would all have to pay our neighbours to do this for us and be employed to do the same chores same for our neighbours so we could afford to pay them.

At a stroke we increase GDP, GDP per head and tax take - I'm sure I would then feel 20% better off, wouldn't you?

MPD

I thought this http://www.theregister.co.uk/2015/10/11/gdp_gross_domestic_product_should_be_net_national_income/ was quite a good article on GDP.

It evens puts a value on "domestic services"

padington

It would be really interesting to know what the real rate of inflation really is, especially in London.

Although it would probably cause a riot if enough renters knew exactly how much poorer they are becoming every year what with the advent of QE.