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Judging GDP
Justin Fox defends GDP as a useful indicator:
Over the years, GNP and GDP have proved spectacularly useful in tracking economic change--both short-term fluctuations and long-run growth...
The issue with alternative benchmarks is not whether they have merit (most do) but whether they can be measured with anything like the frequency, reliability and impartiality of GDP.
I think he has a point there, but the argument seems circular to me. How can one judge how good GDP is at tracking economic change? How can one measure how reliable it is?
GDP is at this point such an ingrained concept that it has become the very definition of economic change: GDP can't track economic change, because it is economic change. And I think that's what the GDP critics, like Joe Stiglitz and Amartya Sen, are driving at: there's no particular reason for the hegemony of GDP over all other economic statistics. Let's have some more very broad indicators, and the result will be a richer view of how the economy is doing.
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