On April 16th 2014 I read an article in the US print edition of the Financial Times. It was called “GDP is flawed – just not in the way most people think”. I actually blogged after reading the article: It’s all in the name – well, the definition. What’s in your Analytic? This article, as I say in the blog, led me to this book.
This is a delightfully little book (some details are shared in the blog) that really should be read by anyone who says they listen to press reports concerning measures of GDP and how it impacts policy, politics and how we view our economy. The fact is that “GDP”, as a measure, is a pretty rough measure at best. Coyle explores the history of the analytic, from its early days post the Great Depression, and again major changes after WWII. It is amazing to think that this one key measure it at the heart of so many faith-based economic and political policy. The actual rate of change of the analytic is actually more important than its absolute measure, for many of us. Turns out that in recent years, the definition of GDP changes.
My blog reported when the US recently aligned with new international standards, and “re-stated recent economic history” by increasing historical GDP figures. Even in yesterday’s US edition of the Financial Times, on the front page there is a story (See Sex, Drugs and GDP: Britain to get £10bn boost to its accounts. of how the UK is aligning with other parts of this new standard, to now include prostitution in its GDP calculation. Coyle does a nice job explaining how different economic minds have struggled around the globe with the definition; and she shares a fair and frank perspective on how we, as lay people, should take the data with the grain of salt it is due. And when I say a grain, I mean the universally accepted and agreed definition of “grain”. Recommended: 9 out of 10.
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