Friday, October 25, 2013

If Hurricane Sandy Was Good For GDP Something Must Be Wrong With GDP

This article (via Lily Scott) uses the Hurricane Sandy example to remind us that GDP measures to dollar value of goods and services produced in a given period of time.  Some of things that are included in the measure are bad things like the cost of repairing the damages from the hurricane.  Similarly, the cost of responding to the damages from the faulty nuclear plant in Japan increased its GDP. 

In addition to including our spending on bad things in our measure of GDP,  we fail to measure a number of things that are important indicators of social welfare.  This article surveys some of the efforts that are underway to add measures of social welfare to GDP.  The measures of social welfare described in this article should appeal to a wide variety of constituents including environmentalists and conservatives who place a high value on intact families.

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