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Estimating GDP- Need for a debate
Issues:
1. Some goods/ services should be valued as negative ?
2. Value of goods/ services under different sectors / sub sectors should be assigned different weights?
Background:
Mr. Rammohan posted the following in the mail today (24th Sept 2013):
"Economists deny that Gross Domestic Product (GDP) was ever intended as a metric of overall country progress or well-being. However, that’s how it is being used. Leaders express alarm if the GDP—the value of all goods and services produced within a nation in a given year—falls. Countries are ranked by GPD or GDP per citizen, implying that countries with higher rankings are doing better overall than countries with lower rankings. What nonsense. We need a better metric for improved quality of life and progress. Other metrics provide a more complete, accurate, and holistic assessment of what we care about: genuine social wealth, natural wealth, and economic wealth. They should assess the well-being / happiness / quality of life of citizens."
1. Rammohan just stated the obvious, and the obvious neglect of other parameters may be deliberate due to deep rooted and not so visible vested interests. It is unfortunate that even some professional interests of scientific communities drive them to take the wrong side at times - eg., nuclear energy to solar PV panels in judging the research versus mass replication.
2. In addition to the other items that are needed to define the progress of the society, submitted are the following for a debate on the very definition of GDP itself:
i) Values of all the goods and services of the society should necessarily be given a +ve or -ve sign. GDP should then be the algebraic sum of all the values of the goods and services in the society. Currently every thing is taken as its mod, which common folks construe as positive.
b) treating cases like Dengue, and other such preventable illnesses (including the relevant pharmacy industry)
iii) some goods and services are easily recognized as +ve
eg., a) Education
b) social & preventive medicine(including the related pharmacy industry)
iv) some sectors are more complex and we need debate to classify the related goods and services
eg., a) defense
b) police
c) sports (carbon neutral versus carbon intensive:
creation of jobs without displacing locals - people and resources like most traditional rural games to
some modern games like Formula 1 races that cause displacement of the locals- both humans and other resources etc., )
d) infrastructure - for mass (public) versus private vehicles
3. The above can grow to a long list.
In fact the sub totals of values of goods/services of any given sector or for that matter in any sub-sector under a given sector can have their own weights: some examples illustrate such need:
a) with in the transport sector, transportation by - water channels, roads, rails, air, partially guided over roads such as electric buses that take power from over head lines, guided over rope ways or pipe lines and nature of energy source for the above.
b) in human resource development, the different sub sectors could be
i) prenatal to post natal care,
ii) preschool,
iii) elementary school,
iv) high school,
v) post high school and
vi) with in R&D -
the sustainable ways related to the science, engg & tech, including social engg aspects and
defense and nuclear sectors etc.,
4. This could all be a daunting task to modern IT with 'demanding skills' from fuzzy logic to game theory.
The biggest challenge would be with the multidisciplinary teams that need to collaborate in arriving at reasonable conclusions.
Estimating GDP- Need for a debate
Issues:
1. Some goods/ services should be valued as negative ?
2. Value of goods/ services under different sectors / sub sectors should be assigned different weights?
Background:
R. P. Rammohan
BE (1971), M Tech (IIT Bombay), MBAEnergy Auditor, Trainer & Consultant (since 1990)
BE (1971), M Tech (IIT Bombay), MBAEnergy Auditor, Trainer & Consultant (since 1990)
Seattle USA and Hyderabad India
www.linkedin.com/in/rprammohan
www.linkedin.com/in/rprammohan
Mr. Rammohan posted the following in the mail today (24th Sept 2013):
"Economists deny that Gross Domestic Product (GDP) was ever intended as a metric of overall country progress or well-being. However, that’s how it is being used. Leaders express alarm if the GDP—the value of all goods and services produced within a nation in a given year—falls. Countries are ranked by GPD or GDP per citizen, implying that countries with higher rankings are doing better overall than countries with lower rankings. What nonsense. We need a better metric for improved quality of life and progress. Other metrics provide a more complete, accurate, and holistic assessment of what we care about: genuine social wealth, natural wealth, and economic wealth. They should assess the well-being / happiness / quality of life of citizens."
1. Rammohan just stated the obvious, and the obvious neglect of other parameters may be deliberate due to deep rooted and not so visible vested interests. It is unfortunate that even some professional interests of scientific communities drive them to take the wrong side at times - eg., nuclear energy to solar PV panels in judging the research versus mass replication.
2. In addition to the other items that are needed to define the progress of the society, submitted are the following for a debate on the very definition of GDP itself:
i) Values of all the goods and services of the society should necessarily be given a +ve or -ve sign. GDP should then be the algebraic sum of all the values of the goods and services in the society. Currently every thing is taken as its mod, which common folks construe as positive.
Assigning +ve or -ve signs may not be easy for all the goods/services.
ii) Some goods and services are easy to be identified as -ve
eg., a) those directly related to fighting crimeii) Some goods and services are easy to be identified as -ve
b) treating cases like Dengue, and other such preventable illnesses (including the relevant pharmacy industry)
iii) some goods and services are easily recognized as +ve
b) social & preventive medicine(including the related pharmacy industry)
iv) some sectors are more complex and we need debate to classify the related goods and services
b) police
c) sports (carbon neutral versus carbon intensive:
creation of jobs without displacing locals - people and resources like most traditional rural games to
some modern games like Formula 1 races that cause displacement of the locals- both humans and other resources etc., )
d) infrastructure - for mass (public) versus private vehicles
3. The above can grow to a long list.
In fact the sub totals of values of goods/services of any given sector or for that matter in any sub-sector under a given sector can have their own weights: some examples illustrate such need:
a) with in the transport sector, transportation by - water channels, roads, rails, air, partially guided over roads such as electric buses that take power from over head lines, guided over rope ways or pipe lines and nature of energy source for the above.
b) in human resource development, the different sub sectors could be
i) prenatal to post natal care,
ii) preschool,
iii) elementary school,
iv) high school,
v) post high school and
vi) with in R&D -
the sustainable ways related to the science, engg & tech, including social engg aspects and
defense and nuclear sectors etc.,
4. This could all be a daunting task to modern IT with 'demanding skills' from fuzzy logic to game theory.
The biggest challenge would be with the multidisciplinary teams that need to collaborate in arriving at reasonable conclusions.
