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Comment by mysterypie | Hacker News Reader

The whole premise that bigger GDP is greater productivity sounds like BS. The economists say, If you got more money for the things you made/did, you must have been more productive.

But to use a computer analogy: 40 years ago, $100 got you the home version of pong (a primitive computer game) -- today the same inflation-adjusted money would get you something mind blowing.

Whoever produced today's game is in some sense a million times more productive than the creators of pong (as brilliant as those developers were for the time).

As far as I can see, GDP or cost is not the correct measure of productivity. Trying to connect GDP with productivity is like linking stock market performance to the outcome of the Super Bowl -- there might be a relation but it's very very very remote and tenuous.

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The people who use GDP are aware of this. The thing is that no one has come up with anything better.

It's also worth noting that GDP missed things before that were a lot more important than clock cycles.

In 1800 in the US about, say 1/3 of children died before they got to 5. This wasn't captured in GDP. But it's a far bigger deal to watch children die than to play games on a faster computer.

Years of healthy life also shot up, mostly prior to 1950 in the developed world. How much is it worth to see your grandchildren grow up because you live longer and healthier and children don't die as much?

This all comes from the fantastic book 'The Rise and Fall of American Growth' by Robert Gordon. It might be worth checking out for you. It goes on about what GDP doesn't measure but still uses it to show that productivity isn't rising like it used to and shows the implications of that.

> The people who use GDP are aware of this. The thing is that no one has come up with anything better.

For what it's worth, I too cannot think of anything better. And good points about all the other things not captured by GDP.

But given that GDP is a terrible measure of productivity, shouldn't the result be: We don't know how to measure productivity on a nation scale so let's stop pretending that GDP meaningfully measures it?

Thanks for the book recommendation. For anyone else who's interested in checking it out I found chapter 1 available here: http://press.princeton.edu/titles/10544.html

""Some of the volume data, such as power and rail freight and even (bank) credit, are interesting because there is less incentive to massage them at the local level. But they reveal only part of the truth, not the entire truth," he said.

"This would be a useful measure for steel and cement production. I'm not sure how well it would measure retail sales.""

This is what one Chinese official uses to get a better sense of the economy rather than relying on massaged numbers. It's still far from perfect obviously, but I find it interesting.

http://www.reuters.com/article/us-china-economy-wikileaks-id...

True, but why does economists and politicians in America be so singularly obsessed about it?

I am from Norway I spent a lot of time reading American news and some of the big differences I notice is that while we in Norway pretty much never talk about GDP and economic growth in public, it is a very central theme in the US. It doesn't mean economics isn't discussed, it is simply different aspects of it. competitiveness, unemployment, salaries is discussed a lot as well as how money should most effectively be used on welfare programs.

I am not saying one thing is better than the other. E.g. in Norway there is probably not enough focus on how value is created. But at least the economic debate feels broader.

But is the happiness produced by playing Angry Birds (or other modern games) any higher than Pong? I'm sure that people had just as much fun playing cards in the 1800s as they do play video games now. In that sense the overall productivity is far lower, since modern games take more work to produce.

I think so - Pong was only available on the arcade machines at first, and cost a coin for each play, and real estate to hold those machines. Angry birds is available on people's phones, 24 hours a day, and the only real estate it needed was a few offices. I'd argue it produced a lot more amusement value than Pong, compared the real capital it used. Card games could only be played with people, whereas Angry birds can be played solo, on a train. When the value of playing card games is higher, people still play card games.

> Card games could only be played with people, whereas Angry birds can be played solo, on a train

Solitaire?

Yeah, maybe it's just me, but on vacation I would play Pac-Man during the day and cards with my dad at night after the arcade closed, and both were fun--long after the 1800s.

Guess which memories are the better ones now?

You're describing the hedonistic inflator. Pretty standard economics adjustment factor.

I see a problem arising from Maslow's hierarchy. You can't eat Pong or an Xbox. They're both entertainment. Not fundamental needs. Security, shelter, food, clothing, are fudamental. You can't build the pyramid from the top down.

pong was mind blowing 40 years ago

These issues are very well understood and incorporated into GDP.

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