My review of GDP: An Affectionate History is here.
Overall, one arrives at a mixed verdict on GDP. On the one hand, it is the best way that we have to measure economic capability. On the other hand, because it fails to account for consumer surplus, GDP statistics lead us to take an overly pessimistic view of the economy. There is no Great Stagnation. There is only a widening gap between the rate of economic improvement and our ability to measure that improvement.
Tyler Cowen’s review is here:
Yet markets are developing new innovations whose benefits probably are undervalued by the GDP concept. This is the potential revision to GDP that commands the most attention from Coyle. For instance, consumers attach great value to Facebook, Google and Wikipedia, all of which are absolutely free to their users and do not enter directly into GDP calculations. I would go further yet, noting that the modern world also better matches plans and goals. Perhaps you can meet your ideal spouse on Match.com or at least pick up cheaper collectibles, better suited to your taste, on eBay. Who makes mistaken purchases of music these days, when you can hear a lot of the songs in advance online? Just about everything is reviewed online, which helps us spend with greater effectiveness. These gains are not well-represented by the older methods of calculating GDP.
So in other words, as the physiocrats were to “regarding agricultural output” and dismissing industrial output , we are to “regarding industrial output” and dismissing post-industrial output. .
Paging Maslow’s hammer…
Tech and the penetration of the division of labor are different. Maybe hard to disentangle bit this sounds like moving the goalposts to trick people rather than improving disaggregation. As if to say “sure labor participation is dropping, but aren’t iPads fun?”
Some things get worse. As for music, I’d almost say it is worse. I have songs spread across 3 ipods that I can’t get onto the newest device. As for tv prpgramming my options are far worse for more money. Podcasts and blogs are an improvement but I never liked newspapers.
http://download.cnet.com/PowerTunes/3000-2141_4-199370.html
Are we so sure consumer surplus these days is so much greater than days of old? I have no reason to believe this and my null hypothesis is it was just as great then.
Lord:
You may want to consider Consumer Surplus as having more of the characteristics of a long-lived asset that has value to its owner long after its purchase and purchase price register in national income accountancy.
So how did we eventually measure consumer surplus? What units did we use?
Arnold:
Just a couple of quibbles with your review …
1. Not mentioned as prominently in your review as I would think appropriate is the accumulated Consumer Surplus phenomena. (See my comment to Lord, above.)
2. There actually is and has been a Great Stagnation – but almost solely and exclusively within the discipline/field of macroeconomics.
I’ll be buying Diane Coyle’s book. My purchase will register in the national income accountancy for 2014. I’ll be deriving Consumer Surplus from it during 2014 and long after 2014 – or I wouldn’t buy it in the first place.