
Things Economists Agree On - robobenjie
http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html
======
WingForward
1) Getting answers to collide when there's only two choices, Agree or
Disagree, is simple, absurdly simple.

50% represents maximum dissension.

How many other questions were there? How did they coincide with the presented
questions? What is the expected distribution if answers were assigned
randomly?

2) A question that deals with global or national finance often can't be
accurately stated in a single sentence. I look at, say, the minimum wage, or
the sports franchise question, and I think, "It depends."

3) There's an assumption in the questions that contain "should". That
assumption is that economists all share the same goals. They don't. The ones
who do may agree about the methods to achieve it.

~~~
notahacker
Agree. It's positively dangerous to assume a simple, selectively chosen set of
questions are a basis for public policy recommendations.

Take the argument about minimum wages increasing unemployment amongst the
unskilled and the young, for example. It's not too difficult to infer an
implicit policy recommendation from the answer to that question...

If, however, you had asked the question "minimum wages increase unemployment
overall" you would find a much lower level of agreement (not least empirical
observations of the introduction of minimum wages in many jurisdictions have
contradicted that claim). There's no inconsistency here since there are plenty
of plausible economic mechanisms for believing that imposing a minimum wage
leads to a countervailing increase in older, more skilled labourers, but even
amongst the subset of economists that believe the actual effect of a minimum
wage is to _concentrate_ unemployment amongst the young and unskilled you'll
find a large degree of dissent over whether this has good or bad implications
for society and the economy as a whole.

It's possible to agree wholeheartedly with Mankiw's simple observation of
minimum wages => youth unemployment whilst disagreeing passionately with any
policy recommendation against imposing a wage floor, even using narrow
economic efficiency criteria.

------
splat
I find it rather strange that even predictions that should be fairly clear-cut
and straightforward (e.g. "A ceiling on rents reduces the quantity and quality
of housing available.") only get around 9/10 agreement. As a non-economist, I
would have thought that a seemingly simple (and testable!) question like that
would be like polling physicsts with the question "Does F = ma?". And I would
sure hope that more than 93% of physicists would say yes.

~~~
_delirium
Well, unlike with physical laws, economic "laws" rarely describe direct causal
mechanisms, but rather generalizations about what happens when you poke a
multi-agent system, whose behavior is often rather complex. It's hard to test,
tests often throw up quirks, it's nearly impossible to control for all
confounding variables, etc.

In the rent-control case, for example, here is one (paywalled and somewhat
dated) dissenting view:
<http://www.springerlink.com/content/k75072652rkxut61/>. Pointed out mostly as
an example--- it's quite possible that particular paper is now obsolete and
adequately responded to. It's a common approach to dissenting from economic
conclusions, though: you admit that a particular widely held belief is true in
a particular model, but then argue that the model doesn't sufficiently
correspond to reality, e.g. because it doesn't incorporate certain important
effects.

~~~
DaniFong
Indeed. In particular, I've noticed that nearly all of the cities I've lived
in and love (SF, Berkeley, NYC, Montreal) have rent control, whereas many
cities that don't have rent control (Dallas, Houston, Phoenix) I've really had
no interest in visiting.

The historical justification of rent control is that it allows for security of
tenure: hence, even renters can put down roots, and a community can have time
to develop. The communities I love seem to have required more time to develop
than the cycles of the real estate market would allow. Even if I personally
pay more rent, I benefit from those communities.

How do the economists model that? They probably don't. They do answer one
question: the housing stock in Dallas and Houston is dramatically more
affordable and probably built to a higher standard than the equivalent in SF
and NYC, but the quality of life is significantly different (to my personal
tastes, sacrificed.) The economists are answering the wrong question.

Rent control does seem to create quite an affordable housing shortage, though.
One wonders, however, if ultimately it spurs on a lot of upscale development,
since the premium you can charge for new units is so much higher, relatively.
(giving you SF's South Beach...)

Edit:

Cato's article on the subject describes the change of Boston and Cambridge
from a rent controlled to a free market system, on January 1, 1997.

<http://www.cato.org/pubs/pas/pa-274.html>

Can anyone describe the change in vibe from before January 1, 1997 to now?

~~~
drblast
Rent control creates a shortage of affordable housing. Sure, it might make
cities nicer because with rent control only wealthy people can afford housing,
so all of the low-income people live elsewhere. Think about living in SF on a
teacher or fireman's salary, and compare that to anywhere else.

The problem with arguing about economics is that for some people, this is a
desirable outcome -- rent control creates nice cities. For others, the outcome
is undesirable -- rent control makes it more difficult for the poor to afford
housing.

Nobody can argue that rent control is good or bad as a matter of fact; this is
an opinion. That's why economists don't model that, it's like trying to
calculate whether chocolate or vanilla is a better flavor.

What can be argued is the stated intention vs. the outcome; when a politician
argues that rent control will keep housing affordable for low income people,
we can state with a very high degree of certainty that he's wrong.

The ugly side of this is that most people don't care whether the politician
has got his facts straight. They want the outcome he's promising.

------
kiujhgbnj
Interesting that all economists seem to be pro-business, anti-tax, anti-worker
rights. You would almost think that most economists worked at banks or for
university business schools.

In other research naval officers believe in a larger navy with lots of ships

~~~
dstorrs
Yep, many economists do work for those institutions. And yep, all of them have
/some/ particular axe to grind (everyone does -- I do, you do, etc). That
doesn't mean that what they're saying isn't correct.

\- Businesses are, in fact, what generates most of the wealth and innovation
in a country

\- Taxes, whether personal or corporate, are not economically efficient.
Government can be compared to an electrical grid -- the money comes in one
place, flows out somewhere else, and there are line losses on the way.
(Government overhead, wastage, etc)

\- As to workers' rights: any society represents a particular set of choices
about production needs and social needs. Sometimes those needs are
cooperative, sometimes orthogonal, and sometimes they are in opposition. When
"workers' rights" means "give us the money and the time to innovate and
consume outside of work", it's good for society. When it means instead "give
us the power to force you to comply with stupid and inefficient rules about
who can do what" (e.g. most modern union shops that I've encountered), that's
bad for society.

~~~
kiujhgbnj
But it does suggest that economics is just politics by another name.

A survey of doctors would presumably agree on the function of an organ, a
survey of hospital administrators might also agree on the need to cut
treatment costs - this doesn't mean the opinions are equally accurate.

~~~
mdda
The labelling that you've chosen "pro-business, anti-tax, anti-worker rights"
is politics itself.

The economists are more accurately characterized by 'anti-distortion'. The
amount of distortion that should be accepted (for instance, to protect the
disabled) is a matter of politics, but the article only addresses consensus
issues.

~~~
kiujhgbnj
True, but the article implies that "economists all agree on these things,
economists are experts - therefore these things are correct"

But the same responses would come from US politicians of both types - would
Swedish or French economists have the same views?

------
benmccann
I found #4 and #11 to be interesting because it is difficult to spend money,
reduce taxes, and not have a deficit. Everyone can agree that it'd be great to
have all of those things. Economists are far less in agreement when it comes
to what the correct balancing act is.

------
tocomment
What does this one mean?

"If the federal budget is to be balanced, it should be done over the business
cycle rather than yearly. (85%)"

~~~
jswinghammer
This is a Keynesian and Monetarist view of budgets. The idea is that IF you
balance the budget (they often don't think this is ever a great idea anymore)
then it should be balanced over the ups and downs of the business cycle.

So let's say a business cycle starts up again and somehow the government
doesn't spend all that extra money before it comes in and there is surplus.
Now booms are followed by an inevitable bust no matter what anyone tells you
when the next one starts up.

Keynes argued that you should spend during busts to keep aggregate demand up
and let the economy recover. So you run a deficit during this time. If you
consider a balanced budget then they might argue that you should balance it
with consideration to short term gains and losses.

If you're interested this video is a fun and very accurate way to learn about
two different views of the business cycle:

<http://www.youtube.com/watch?v=d0nERTFo-Sk>

For the record I'm with Hayek in this video :)

------
yc_peter
I would argue that the questions asked are largely wrong. A ceiling on rents
does reduce the amount and quality of housing. The question, then, is: how
much does it reduce amount and quality of housing, and how much does it lower
prices? If we have minimum wages, unemployment will be higher, but how much
higher? On the other hand, how much higher will average wage be?

Economics is a cost/benefit trade-off. If minimum wage doesn't reduce
unemployment that much (and all evidence is that it doesn't -- the US is at
about a natural level of unemployment in the long term, moving up and down
with business cycles), we're better off with it in place. If it kills
employment, we're better off without it.

------
nhebb
Interesting that most of these were fiscal and regulatory policies, but no
monetary policies held a broad consensus. I would have thought there would be
more consensus on interest rates and money supply.

------
jboydyhacker
#4 is a bit misleading. It states "Fiscal policy (e.g., tax cut and/or
government expenditure increase) has a significant stimulative impact on a
less than fully employed economy. (90%)".

While that sounds harmless, a lot of people will take that item and
extrapolate it to our current situation and say the correct policy response is
to stimulate the economy with fiscal policy. That has to be right since 90% of
economists agree right? Well, what happens if you add a little context to the
quote and add the text "with high levels of debt as a share of GDP". That 90%
number would likely come down massively most likely skewed by biases not
related to economic theory.

In short, the quote is very misleading if you are trying to use it as a guide
to our current mess. What does this imply the right policy response for us is
now?:

We have to make major cuts in areas of excess that have little stimulative
impact. This means cutting back on government pensions, entitlement reform,
and cutting things like 9/11 contracts that don't provide any real increase in
safety. It means we can also strategically spend in areas that have been
neglected the last 10 years like an energy grid for a more stable energy
policy, alternatives to petroleum based fuels, a modernized air traffic
control system and infrastructure.

At a macro level this means net spending decreases in very sensitive areas
like entitlements but also strategic increases that make our country more able
to compete like education, energy independence and infrastructure.

------
jleader
"If all the economists were laid end to end, they'd never reach a conclusion."
-- George Bernard Shaw

Edit: note that the article only claims a maximum of 93% of economists
agreeing on any one of the items.

------
sliverstorm
I'm curious about the "Eliminate Agriculture Subsidies" one. I don't know
enough to give a good opinion, but it seems to me like that could wind up
pricing basic, quality food out of the hands of the poorest people, and they'd
either have problems with starvation or be _forced_ to eat junk.

I mean, maybe I'm wrong, but I could have sworn it was The Man that is keeping
eggs down at around $3/dozen and milk around $4/gallon.

~~~
sdurkin
Actually, you'd like federally unsubsided foods. It would mean more locally
grown produce and meats. Most of the big agricultural subsidies are for corn
and sugar, the really bad stuff. Agricultural subsidies are making the
nutrition crisis worse, not better.

~~~
sprout
It's unlikely that the removal of agricultural subsidies would create a
significantly large market for locally grown produce and meats.

In fact, it would probably do precisely the opposite, as food could be
outsourced just like the rest of our industry to areas with minimal labor laws
to hamper cheap food production.

------
amattn
The classic response is "nothing".

That being said, getting 4 out of 5 economists to agree on something doesn't
mean it's right. Most economists will tell you that public policy works best
when you have the capability/political will to iterate on solutions. Not
unlike a startup really.

~~~
sliverstorm
I was shocked when I didn't get an empty white page.

~~~
mdda
That's because the media loves an argument, and politicians love lobbyists...

When most economists see a debate between 'experts' on CNN (or Fox) I'm sure
they're shaking their heads and sighing.

Imagine seeing a debate on TV about the merits of Java vs Windows - with the
two experts being marketing people from Oracle and Microsoft. The whole thing
would be a facepalm for HN readers - except that to an outsider, it would
sound like a clash of brilliant minds.

------
magice
Last time I checked, economics was still considered "scientific." That means
we should not be operating on consensus basis, but proof. What is the
scientific model of these things that economists agree on? Have them be
checked against history? Have them predicted future accurately? Have we been
able explained whatever deviation they have with reality?

Until such model exists, consensus means nothing but politics. Maybe, just
maybe, we should start considering demote economics status to "pseudo-
science." Last time I check, fortune tellers also agree on shit, you know.

~~~
fredex
"consensus means nothing but politics"

Actually, why don't you do this if you think it's all about politics. Get your
favorite politician, see who their economic advisers are, then understand
their views. Mankiw stated economic points that are accepted by a wide
political spectrum.

------
e40
"A minimum wage increases unemployment among young and unskilled workers.
(79%)"

The fair market price for young and unskilled workers would be lower than the
minimum wage, yes. Is this a good thing? For young workers, if young is less
than 18 (ie, still in school), then this is OK. But, for unskilled workers?
That entire class would be in poverty, as if they aren't on the edge of it
now.

~~~
billswift
The problem is that the only real way most unskilled workers have to increase
their skills is by working. Even those hired at minimum wage usually quickly
move up to a higher wage as they get experience. Unskilled workers don't stay
unskilled once they actually start getting experience.

------
jkent
Whilst it doesn't really support or refute any points, economists and
interested people might be interested in the light-hearted
<http://www.youtube.com/watch?v=VVp8UGjECt4>

------
bugsy
Great article. I fully agree with its findings that 93% of US economists are
me-too academics who don't understand economics and whose "consensus" is
destroying the world.

------
dennisgorelik
Surprisingly, I agree with all 14 statements on that list.

------
pedanticfreak
I am not an economist, but I think economists have been doing a lot of catch
up lately. Traditional economists have tended to see people as rational
agents, whereas more recent behavioral economists are showing how people are
pretty universally irrational.

Sure, in an idealized economic simulation we would consider every possibility
and only choose the most optimal one. It only stands to reason in such an
environment we should remove barriers and maximize choice. But the reality is
people are limited and take shortcuts in decision making that traditional
economists never even imagined. Those human cognitive limitations need to be
seriously considered before jumping to any conclusions about economic policy.

~~~
mdda
But economists would all agree that the models have limitations - that's not
really news. The news here is that the limitations are a 10% slice rather than
a 1% slice.

But that doesn't stop the theory being 90% correct.

Incentives-wise : is it easier to get people to buy a book about 'classical
economics' or the 'whole new type of economics that makes those classical guys
look like dinosaurs'?

~~~
pedanticfreak
I would liken it more to elaborate geocentric models of the solar system.
Sure, they can explain the data. And they can make accurate predictions within
a certain margin of error.

But then there are the cases they can't explain or predict accurately. Not to
mention they keep getting more complex and more uncomfortable to believe. At
the end of the day it's just the completely wrong idea tortured to give the
right answers. The solar system was heliocentric all along.

That's the kind of place I think traditional economic models are in right now.
We're steps away from proving out the planets orbit the Sun, but there are
still a lot of smart people writing elaborate dissertations about the Sun
orbiting the Earth.

------
HilbertSpace
Here's one broad way Mankiw and company are going wrong. I start with three
preliminary points and then point to the going wrong:

(1) They have _physics envy_. In particular, they want to sit in a small,
dark, closed room and with just _pure thought_ , with little to no contact
with any real economy, come up with some economics version of Newton's second
law F = ma or Einstein's result in special relativity E = mc^2. Nonsense.
Incompetent, intellectually bankrupt nonsense.

(2) With their _physics envy_ , they want _mathematical economics_ and to
build _mathematical models_. E.g., for some decades after Dantzig's simplex
algorithm, they fell in love with optimization. As optimization moved forward
with nonlinear programming, the Kuhn-Tucker conditions, nonlinear duality,
deterministic optimal control and the Pontryagin maximum principle, and
stochastic optimal control, the mathematical economists continued to use such
applied math to build their models. A shockingly large fraction of the Nobel
prizes in economics are from just such nonsense. The math is rock solid; there
are occasional good applications to particular, small problems, e.g., the
climb, cruise, and descent of an airplane or what mix of refined products
should come today from an oil refinery; an _application_ to a real economy is
nearly always just total BS.

(3) To keep their models relatively simple, they make a lot of assumptions.
E.g., in finance, they assume _perfect information_ and f'get about the guy on
a motorcycle at an airport who asked the guy on the ramp where the plane was
going (as in the movie _Wall Street_ ), _naked shorting_ , etc. E.g., they
make a lot of Brownian motion assumptions that then say that the LTCM disaster
was wildly improbable, which it was not. They make assumptions about which
workers are _more productive_ and feed that into their optimization looking
for some case of a _non-inferior_ solution or _Pareto_ optimality as if
Chinese women had 20 fingers on each hand so could sew buttons much faster
than women in South Carolina.

Going Wrong. They take their assumptions of their simplistic models and the
corresponding conclusions and say that a real economy SHOULD be like that. So,
they want to bend the real economy to their Procrustean bed of simplistic
assumptions and conclusions. If physical science had done such a thing, then
they would still be saying that the planets should move as Ptolemy said, that
falling bodies should still move like Aristotle said, and that we should still
be looking for flogiston.

This _economic science_ is intellectually both incompetent and dishonest; it's
contemptible, and dangerous.

Once I went through Samuelson's college text: I found NOTHING that made any
sense at all except for his chapter on the Federal Reserve; in that chapter,
he just described what the laws had established and was clear. All the rest of
the book was total BS disconnected from any real economy. E.g., if we buy more
transistors, then the price of each transistor has to go up. Right:
Transistors used to cost several dollars each, and now, after buying many
billions, maybe trillions, of transistors, we can buy a few hundred million
for less than $100, retail. Wheat: For years 1800, 1850, 1900, 1950, and 2000,
take the quantity in bushels of wheat produced in the US and the price per
bushel of wheat, corrected for inflation, see that the quantity has gone way
up and the price, way down. Similarly for iron, steel, chickens, and pork.
We're talking total suckage. The very first things in academic econ, the
_supply and demand_ curves, just do not work in any meaningful way in a real
economy; real economies mostly just don't work that way, guys. Total BS.

E.g., the econonuts argue for _free trade_ based on simplistic nonsense. Their
idea is that, for some _global benefit_ or some _Pareto optimality for the
world_ , it is _better_ if the production is where it is most efficient. So,
yes, grow teak wood in Thailand, grow rubber in Viet Nam, mine tin in
Indonesia, and pump oil in Saudi Arabia. Fine. Then, sew buttons in China?
Sure, if the Chinese women had 20 fingers on each hand. But they don't. And a
sewing factory in China has to struggle with bad situations for each of
suppliers, legal system, transportation system, communications infrastructure,
information technology infrastructure, etc. Still, the econonuts want to
conclude that China is _more efficient_ at sewing buttons. No they aren't:
Instead, the Chinese government understands what the econ profs don't: China
takes their young women and makes each of them "an offer they can't refuse",
work for pennies a hour under whatever conditions, or else, period. It's not a
matter of being _efficient_. So, businesses, careers, lives, and communities
in South Carolina are ruined. So, we pay the former textile workers to do
nothing or just let them die. I know: A few of the textile workers get to
serve BBQ. From such destructive nonsense, instead of textile workers, I have
a better suggestion for who deserves to die. They are doing it, and we should
say so: The academic econ profs are KILLING Americans.

Then there's _US competitiveness_ : In the 1950s the US had a great economy.
Except for some points of information, biomedical, and materials technology,
it's not clear that our standard of living is as high now. Our imports were
meager, maybe some tin from Indonesia, etc. We didn't buy much from outside
because the other industrialized economies were devastated and, thus, had
little to sell us. But we did sell some products: Telephone systems,
construction machinery, airplanes, etc. Then the idea is that since we could
sell at what were astoundingly high prices, especially for the buyers, that is
why our economy was doing well: NONSENSE. Total 100% nonsense: So, Joe went to
work at, say, Caterpillar, and made great machines which we shipped to, say,
France. France paid us in silly paper which we converted to gold. So, we
accumulated a lot of gold. What good did this do Joe or the US? Next to none:
In particular, Joe's labor got consumed in France instead of the US. Econonuts
are confused. It is easy to see why, say, Japan, Saudi Arabia, or Jamaica
needs foreign trade. But the US was doing just fine, thank you, as essentially
a self-sufficient economy in the 1950s and, with foreign trade, is doing worse
now. We are shipping our _going businesses_ , _market position_ , _education_
, technology _secret sauce_ , and _intellectual property_ overseas, and the
econonuts conclude that this is _good_. Total BS.

Now, sure, we want to import some oil: Saudi Arabia has oil and needs national
defense, wheat, construction expertise, water and sewer systems, information
technology, cars, etc., so we can swap. Fine.

So, why did we give away major parts of the US economy? Sure: Some econonuts
had excuses for why this was _optimal_ , and the Foggy Bottom types wanted to
_save the world_ by exporting the US economy. Meanwhile, back in the US, the
citizens got it in the rear. US citizens were killed, and are still dying.

So, several large US industries got shipped to Taiwan, South Korea, Pakistan,
and China, and whole states in the US had their economies devastated. There is
a _loss_ the econonuts don't count: The human capital that gets _written off_.
Or, the econonuts assume that the textile workers and metal bending
manufacturing workers can, of course, just move to Redmond and write software
for Microsoft, which has so far likely never happened even once, to sell to
China, which, of course, steals software and doesn't buy it.

The econ profs conveniently f'get about market manipulations we learned about
in the US in the 1890s -- _predatory marketing practices_ , etc. And they
f'get about the _assets_ of a _going business_ , technology _secret sauce_ ,
market position, etc. The simplistic econ models just don't count such things,
so the econonuts assume that we shouldn't think about such things in the real
economy and, thus, just give them away.

In school, I knew the applied math MUCH better than the econ profs, and their
nonsense and its intellectual dishonesty were infuriating. After the first
lecture, I asked the econ prof, nicely, what he was assuming -- continuity,
differentiability, continuous differentiability, convexity, pseudo convexity,
quasi convexity, or what. Then within an hour he had called my Ph.D. advisor
and got me OUT of his class. That was not my intention but was GOOD.

Academic economics has NOTHING important to do with any real economy and is
from irrelevant, incompetent, dishonest, and contemptible down to seriously
dangerous.

We're talking ordinary crooks way down to the lawyers way, way down to bucket
shop operators and from there way, way, way down to the politicians and from
there, far, far down where just can't see at all, the econ profs. I know what
we should export next: If all the econ profs were lined up on a cargo ship, it
would be a good thing. And still better if the ship sank far out at sea.

The real economy is IMPORTANT, way, WAY too important ever to be touched by
anything like econ profs.

~~~
john_horton
A few points:

(1) Many if not most economists are empirical. Recent John Bates Clark medals
---a good reflection of what academic economists think is the best work being
done right now---have gone to economists doing empirical work. Recent examples
include what works for development (evaluated with large randomized controlled
trials), what are the causes of growing income inequality, how should we
structure auctions etc. <http://en.wikipedia.org/wiki/John_Bates_Clark_Medal>
. To say that most economists have no contact or interest in empiricism is
incorrect.

(2) The point about simple models is not that economists fully believe them---
it's that they force everyone to be explicit about assumptions. They also try
to identify what are the key features of admittedly very complex phenomena.
This is what models do in most scientific endeavor. That the models often
perform poorly is a sign of an immature science---not fraud or dishonesty.
You'd get eternal fame and become fantastically rich if you came up with a
financial model with great predictive powers---do economists not create such
models because they are stupid and corrupt? That seems unlikely.

(3) The transistor example completely misses the key distinction that _every_
presentation of the simple supply and demand model always makes - i.e., there
is a difference between the short term and long term. If demand doubled for
transistors tomorrow, the price wouldn't rise?

(4) You confuse absolute and comparative advantage.

(5) "In the 1950s the US had a great economy. Except for some points of
information, biomedical, and materials technology, it's not clear that our
standard of living is as high now."

This is where I stopped reading - this is so obviously wrong
<http://www.wolframalpha.com/input/?i=GDP/capita+real+US> that it's hard to
take seriously any conclusions on the relative merits of different industrial
policies the follow from this "fact."

~~~
Benjo
In response to point 5. Is it clear that per capita GDP is a good measure of
standard of living? Adjusted median income has not risen much with GDP. Do you
have an argument for why standard of living should be evaluated as a mean
instead of a median?

[http://www.stanford.edu/class/polisci120a/immigration/Median...](http://www.stanford.edu/class/polisci120a/immigration/Median%20Household%20Income.pdf)

~~~
SHOwnsYou
> _Is it clear that per capita GDP is a good measure of standard of living?_

Yes. This is something else virtually every economist will agree on. ACists,
neoclassical, keynesian, Chicago, Austrian, I'm sure there are other major
schools I'm forgetting, but this is a very accepted measure of standard of
living in the field of economics.

~~~
aloneinkyoto
> Yes. This is something else virtually every economist will agree on.

A statement which only help to make his point about economists being ignorant
crocks. GDP is heavily doubted as a good measure of standard of living in all
other social sciences.

Examples of what the GDP measure fails to take into account: ecological
sustainability, wealth distribution, non-market transactions, underground
economy, non-monetary economy, subsistence economy, quality improvements and
inclusion of new products, what is being produced, externalities,
sustainability, etc, etc...

[http://en.wikipedia.org/wiki/Gross_domestic_product#Limitati...](http://en.wikipedia.org/wiki/Gross_domestic_product#Limitations_of_GDP_to_judge_the_health_of_an_economy)

~~~
SHOwnsYou
I don't understand your argument here.

You won't find an economist (or any other person person) in the world that
thinks GDP exhaustively covers every aspect of an economy and how it provides
a standard of living.

What you will find is that they all agree GDP is the best available measure to
determine a standard of living that is derived from some level of economic
production.

If GDP is a terrible metric for determining standard of living, I'd like to
know why it is still the most often used metric (by economists and non-
economists alike) and a coherent argument for some alternative standard.

Any satisfaction based metric means that the majority of the developed world
is doing something wrong -- numerous happiness studies show indigenous peoples
often have a higher "happiness index" than people in the developed world.

Environmental based metrics have their own problems because environmental
benefits and harms are not internalized by nations.

Income distribution based metrics aren't acceptable because the harms of great
income distribution disparity are not easily mapped and are rarely agreed
upon.

The only thing that might make sense is a metric based on life expectancy and
education (Human development index from your Wikipedia link), but even that is
problematic. Research created free-riding, regardless of patents.

The second a US company makes a drug that eliminates cancer, any lab that gets
their hand on the drug can reverse engineer it with ease. The however many
millions of dollars that went into building it (and become a function of its
cost) are undercut by countries/people that do not respect the intellectual
property rights of such a patent.

The outlay of spending becomes highly concentrated while the company doesn't
see the returns that it expects. The drug copier gets the benefits of the
hundreds of millions in R&D expenditure while only spending a few extra days
of a scientists time.

~~~
aloneinkyoto
The reason why GDP is still used is because we have a lot of historical GDP
data available and it is a fairly simple measure to understand and collect
data on. Nor do we have a good enough alternative measure yet. We do have
several candidates, but just as you state they all have weaknesses that needs
to be understood.

The problem with economic sciences is that the GDP measure is used without
critique, without fully understanding its trade-offs or by simply ignoring it
deficiencies. That I believe is very careless when you are in the end dealing
with the lives of real people.

~~~
SHOwnsYou
I have a (procedural) problem with your critiquing something not inherently
bad with no alternative. You haven't presented any new arguments against the
GDP nor have you attempted to argue that any possible alternative is more
viable than the GDP. I invite you to respond to any of the arguments I made
against GDP alternatives.

> _The problem with economic sciences..._

Honestly, this is hard for me to read.

Lectures on the inadequacies of the GDP are Macro 101 stuff. Throughout
college in my different econ classes the shortfalls of the GDP were frequently
discussed by several different teachers.

This economic sciences conspiracy to prevent indictments of the GDP you're
trying to present as fact is completely fabricated and gives a bad name to
economists that do discuss the shortcomings of the GDP (read: every economist
ever).

