Long-shot presidential candidate Andrew Yang wants to revamp the way the government measures the economy.
Yang argues such a measurement should also include a host of other factors: quality of life, life expectancy, happiness, mental health, inequality, student debt and more.
But economists said altering gross domestic product, the broadest measure of goods and services produced in the US, could be problematic.
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Long-shot presidential candidate Andrew Yang wants to revamp the way the government measures the economy. But economists said altering gross domestic product, the broadest measure of goods and services produced in the US, could be problematic.
“When you measure something, you implicitly set your policy goals,” Yang’s campaign website reads. “By focusing our measurement on GDP, we’ve promoted production over all else.”
Yang argues such a measurement should also include a host of other factors: quality of life, life expectancy, happiness, mental health, inequality, student debt, national optimism, volunteerism, economic mobility and more.
That would happen through “a wider index that measures human as well as monetary indicators,” his website said, but isn’t clear what that would look like in practice. The Yang campaign did not respond to an email requesting comment.
Economists have long acknowledged the limitations of GDP, with some even suggesting its formula be tweaked. But the measure was never meant to be used alone as an indicator of welfare or in social research and policymaking.
“It is important to get good measures of all these variables. In my view, however, it is futile to try to combine them with GDP into a single indicator,” said Jeffrey Frankel, a professor at Harvard University’s Kennedy School of Government and a research associate at the National Bureau of Economic Research.
Economists said incorporating other factors could muddle research. For example, data on economic output is crucial to understanding when recessions begin and end.
“Mixing in things like air quality and literacy with that will not improve its ability to do this,” said Adam Ozimek, the chief economist at Upwork. “The good news is that almost nobody in the economics or policymaking communities thinks GDP is the only thing that matters.”
Most attempts to develop a broader measure, such as the Human Development Index produced by the United Nations, have not added much to GDP, according to Jason Furman, the last chairman of the White House Council of Economic Advisers under President Obama.
“It is always worth looking at a range of indicators, but academic research has shown clearly that most measures of happiness and well-being are highly correlated with GDP,” Furman said.
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Source:: Business Insider – Politics