Tim Worstall

National Income Accounts.

Don Boudreaux is looking to compile a list of things that have definitely made life better but which are not captured in the National Income Accounts. I know we get some real economists around here occasionally so if you happen to be one of those (or if you have a good idea even if not) post and link to him or email him with your ideas.

Mine would be the value of vaccines. Now these are valued in the income accounts, at their cost of production (or rather their cost of administration), but most certainly not at their value in terms of making life better. That child mortality rates are 1 in 143 in the rich world and 1 in 10 in the poor (and yes, I’m aware that it is not just vaccines that relate to this) is not properly reflected in the $30 or so per vaccination that appears in the National Income Accounts.

That’s the first one off the top of my head anyway.

In

7 responses

  1. Monjo Avatar
    Monjo

    what about Page 3 girls? they also probably improve life expectancy

    Reply
  2. David Gillies Avatar
    David Gillies

    Isn’t the measurement of felicity in economic terms a pretty hot topic these days?
    For my part, the non-economic benefits of the modern Internet are huge. I get an enormous thrill out of asking myself a question and then looking for the answer. One of my hobbies is recreational mathematics. With a copy of Mathematica and this website, I can go exploring territory that would have been inaccessible a few years ago. It’s absolutely unproductive, economically speaking, but the pleasure it gives me is great.
    Another thing that makes my life better in non-economic ways is modern Supply Chain Management. I can go to my local supermarket, even here in Costa Rica, and be presented with an array of goods that would have staggered my mother’s generation. Likewise, the proliferation of restarants from all corners of the globe. Within 30 minutes of my house I have access to cusines from all corners of the world. This is driven by affluence, but it’s not affluence per se.

    Reply
  3. dsquared Avatar
    dsquared

    Boudreaux certainly does intend to “err on the side of inclusiveness”. His one example is wrong.
    “My life and that of nearly everyone else who flies commercially has been improved by the influx of quality merchants and restauranteurs into airports. But I doubt that this improvement shows up in the per-capita GDP figure.”
    Of course it does; as value added in the distributive trades sector. Building a shop somewhere where people want one and then selling things from it is pretty much the paradigm example of an activity that shows up in GDP.

    Reply
  4. dsquared Avatar
    dsquared

    Also, Tim, do you have any real reason for believing that the value of vaccines isn’t reflected in their market price? (I’d note that children who don’t die, grow up and get jobs, which goes into the GDP). If you’re going to claim that primary healthcare creates a lot of value over and above that which can be measured by market transactions, then you ought to be aware that you’re opening up a gap through which social democrats like myself are going to drive a coach-and-four.
    David: similarly, supply chain management is in the GDP. If you buy something from these shops, that’s final consumption expenditure. If you don’t, then I put it to you that the free market says that you in fact didn’t value the supply chain management enough to make a transaction.
    In general, if you and the Cafe Hayek boys are going all out to claim that revealed preference in transactions isn’t a valid method of finding out what makes peoples’ lives go better, then you ought to be aware that you’re chopping away at the fundamentals of Austrian theory and of the case for free markets.

    Reply
  5. Brent Buckner Avatar
    Brent Buckner

    Copies of music & videos that are not paid for via commercial transactions. A lot of people are getting a lot of utility out of file-sharing that isn’t showing up in the national accounts!

    Reply
  6. dsquared Avatar
    dsquared

    This is true. Also, prosititution is unlikely to be recorded at anything like its true contribution to GNP; in principle it would be income from services, but not all prositutes declare their income and there is not much chance of it being recorded in expenditure surveys either!
    Tim adds: So make prostitution legal and grow the economy! Man marries housekeeper in reverse?

    Reply
  7. Monjo Avatar
    Monjo

    The EU countries are trying to get accurate ideas of the amount spent in the black economies, on drugs, hookers, money paid in cash to gardners and babysitters etc.
    Italy reckons upto 20pc of its GDP may be black market; the rough guess is the US figure is about 7pc.

    Reply

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