Why GDP is not a good measure

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Jobs for economics • Best Jobs for Economic... GDP is a measure of overall income and is supposed to approximate measures of wellbeing in the economy. In this video, we talk about GDP and its limitations as a measure of wellbeing.

[@oceanthresher6184]

“We have the strongest economy in our nation’s history! Just look at that GDP growth!” 500,000 homeless people: “Sooo, when does that money trickle down to us?”

[@Thisislias689]

Thanks for helping out with the points

[@abbasalbahrani4594]

Well explained. Thank you Dr A

[@k.vn.k]

In summary GDP does not include: quality of life, environmental pollution, crime rates and wealth equality. 😊

[@EconWithDrA]

Great summary. Can you please do that for my other videos!!

[@MycorOpsima-bb3jw]

​@@EconWithDrAis it possible also that the GDP of each place is not accurately measured? Or the total GDP is not measured?

[@MycorOpsima-bb3jw]

​@@EconWithDrAGDP is not also accurate measure right because some of the companies in a certain country are owned by foreign investors?

[@EconWithDrA]

@MycorOpsima-bb3jw yes. That is covered in another video. A good example of that is underground economy and evasion

[@EconWithDrA]

@@MycorOpsima-bb3jwbeing foreign owned should not impact the calculation of GDP. As long as the income produced happens in the country, then that is counted to GDP of that country

[@esmaeelbaz6827]

thaks DR That help me a lot

[@EconWithDrA]

Thanks for stopping by. Glad it was helpful

[@jalalhassan4009]

Then which is the best indicator?

[@EconWithDrA]

No one indicator is best. Understanding the state of the macroeconomy requires evaluation of several measures, including unemployment, labor market participation, inflation…

[@DocRealTalk]

@@EconWithDrA Wish people who ran my country evaluated those measures lol Joining you from Sri Lanka as the country collapses around me.

[@vere9652]

Faul argument. Because you are not explaining why gdp isn't a good measure, but why gdp isn't everything. It's like saying polution of crime rate isn't good measure of well being. Of course it's always better to have lower polution or crime rate, it's just not the only measure to consider.

[@EconWithDrA]

Thanks for stopping by and watching. Your point is correct. It isn't the only measure, and isn't really a complete measure of wellbeing.

[@muhammadmehmood2084]

Very well explained. However, I don't understand how household production contributes to a country's economy?

[@EconWithDrA]

The goal is to measure everything that adds value. If you make your own desk, that is production and adds value, but since you made it at home, it doesn’t count as GDP. If you buy a similar desk from ikea it is considered production. So the issue is in how we count things. Does that help?

[@muhammadmehmood2084]

@@EconWithDrA . Yes Thank you!

[@dwarwenger]

​@@EconWithDrA Yes, but you didn't mention the fact that if you buy something from IKEA you are paying sales tax and IKEA is paying corporate tax. So there is no incentive for the government to help you increase your production of tables for personal use, but instead focus on helping IKEA (and indirectly creating a lot of capital to support others through taxes).

[@ryoukwjdbwopqmqpzl73819]

The quality, quality of the c affordable services.. goods you get in return matter a lot. Here in india as you're above the poor people's bracket.. everything becomes worth it.. cheap housing, internet, transport etc.

[@EconWithDrA]

Thanks for sharing your experience and connecting it to the lesson

[@psikeyhackr6914]

Economists don't tell us that they have been ignoring the depreciation of durable consumer goods for decades. What is NDP? Can economists do algebra? NDP = GDP - Dcap Real NDP = GDP - (Dcap + Dcon) Dcap = Depreciation of Capital Goods Dcon = Depreciation of Consumer Goods GDP = Grossly Distorted Propaganda How much CO2 in atmosphere is the result of unnecessary manufacturing due to planned obsolescence? Can we solve the climate problem while allowing economists get away with bad algebra?

[@EconWithDrA]

How do you define durable goods depreciation? What’s your latest measure of grossly distorted propaganda?

[@psikeyhackr6914]

@@EconWithDrA Economists define a durable consumer good as any consumer product that lasts 3 years or more. But how could data be tracked for all of the different products? So suppose we do a guesstimate for cars. There were 200,000,000 cars in the US in 1994. Assume $1500 in depreciation per car per year. That comes to $300,000,000,000 for 1994. Is that an amount economists should ignore? Access to DMV records might provide more accurate lifespan data. But my point is does it make sense to treat air conditioners like bananas? And to not make accounting/finance mandatory in high schools?

[@EconWithDrA]

How would you suggest we treat them?

[@psikeyhackr6914]

@@EconWithDrA Did you find that Economic Wargames essay by Dal Timgar? When I post a link the comment gets deleted. Manufacturers can do failure analysis on products that result in bathtub curves. They should be required to provide that data to consumers and economists to do better analyses. I used to work for Panasonic and repaired some crap called a Toot-A-loop. But can consumers make rational decisions without good data?