Comment by graemep
1 year ago
GDP is flawed measure - unfortunately we lack a better one.
The aim is to maximise utility, but we cannot quantify utility, and cannot tell when it increases at the level higher than an individual. So we use GDP and then .... Goodhart's law.
Musing for a minute, I wonder if there's a way to create an anti-GDP and subtract them?
Something like GDP - (Sickness, Mental Health Therapy, Fixing broken windows and flat tires... et. al.)
It is an interesting idea. It might be possible to improve measures by subtracting some things that can be adjusted for that are harmful. There are lots of problems though - for example, higher expenditure on health might be a result of worsening mental health (bad), or better provision of services (good).
That still does not solve the underlying problem. The aim of an economy is to maximise utility (vaguely defined as happiness, satisfaction with life) or more meaningfully defined as an individual's preferences, The problem is that we cannot meaningfully aggregate this across individuals to maximise for the whole economy.
Some people will claim that fixing broken windows and therapy session just generates GDP! Yay for booming stock market lead by therapists and window installers...
Interesting thought!