We’re back again with another in our weekly reading list posts of books we think our community will find interesting and thought provoking. Once again, buying the book via the Amazon links in this story also helps support Techdirt.
I’m a GDP skeptic. I think it’s a ridiculous concept that is poorly measured and much more meaningless than most people realize. And, I think it can be quite damaging at times too, because we optimize for what we can measure, even if it’s not what we should be optimizing. We see this in so many areas. If there’s a number, our brains seem to turn to mush, even when people say that the numbers aren’t necessarily the most important thing (e.g., look at the way people use “patents” as a measure of how innovative society is — it’s a disease). I’m certainly not alone in being a GDP skeptic either — debates have raged on for years about it in economics and policy circles. A few years back, economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi, at the request of then French President Nicolas Sarkozy, published a report which led to a book entitled Mismeasuring Our Lives; Why GDP Doesn’t Add Up, which also digs into the somewhat nutty (and in my mind, equally problematic) concept of “Gross National Happiness” as something of an alternative to GDP.
More recently, economist Diane Coyle published GDP: A Brief but Affectionate History, and the title is pretty accurate. The book is pretty short, and highly readable, and quite interesting. Coyle is somewhat less of a GDP skeptic than I am, and as you can probably guess from the “affectionate” part of the title, more willing to cut GDP some slack as a useful tool — though she seems to be coming around towards the view that it’s potentially outdated, especially as the nature of our economy has moved towards the digital world. Either way, I quite enjoyed it and learned a lot about the history of GDP and some of its more ridiculous and entertaining quirks.
For people who don’t spend much time in macroeconomic circles, or thinking about things like “just how do we measure economic output, productivity or prosperity,” many seem to think that GDP is a much more… credible and meaningful number than it is. And I highly recommend reading both books mentioned here to begin to understand why it’s a lot more problematic than it seems.