Increasing the accuracy and usefulness of the GDP

Abstract

Measures of Gross Domestic Product or national income would be more accurate, easier to compile and to interpret, and free of value judgments if they were confined to market activities. Once so confined, and the total frankly referred to as the commercial GDP or the commercial national income, the danger of misinterpretation would be greatly reduced. The present measures are corrupted by well-meaning efforts to make them measures of welfare and of the effect of human action on the environment. Neither welfare nor the environment can be embraced in money totals and the presentation of income totals as though they are so embraced is deceptive; hence current efforts to widen the scope are to be discouraged. The laudable effort of economics to avoid value judgments is counteracted by the innumerable value judgments implicit in any interpretation of GDP that goes beyond the market. Mother's cooking mayor may not be the best, but it is worth more than zero. On the other hand, statistics of the distribution of the commercial GDP would be of great value to most users, especially for tax policy and marketing.