As aggregate output has become more difficult to determine, due in large part to the nature of today's services sectors, GDP as a measure has increasingly been questioned as well. Might the changing nature of aggregate output, help to explain recent debates regarding potential human welfare considerations for GDP? If so, how could such an approach assist this vital measure in its core tasks - particularly given its underlying monetary representation?
Diane Coyle noted some of these issues in a recent podcast for the International Monetary Fund. She stressed the sizable gap between what is being measured, versus welfare effects which could be worthy of recognition. In particular, GDP is "less well suited to measure progress in today's digital economy."
Despite the importance of digital product for societal gain, the greatest need of the present, is careful attention to human welfare via levels of aggregate economic participation. In particular: How has the resource capacity of multiple income levels changed over time, in relation to what have become basic institutional requirements? We simply don't have a clear statistical picture, how these institutional expectations correlate with the resource capacity of a full range of citizenry. What's more, a better understanding of our existing non tradable sector requirements, might present a clearer picture of existing societal debt obligations as well.
Digital gains, on the other hand, largely accrue in a discretionary consumer context. Regular readers likely aren't surprised, that I find the non discretionary requirements of non tradable sector activity, to be one of the greatest obstacles standing in the way of human welfare. Nevertheless: Even though non tradable sectors have been less than forthcoming re quantifiable output, we could eventually develop new means of services generation which are more transparent at the outset. And doing so, could vastly improve the measure of GDP in the 21st century.
The present lack of services quantification, has made it difficult to understand the dilemma that lower income levels actually face. Even as citizens have experienced tradable sector abundance for decades, their ability to do so has gradually diminished, as vital elements of non tradable sector assets and participation have been made artificially scarce. Should additional measure of human welfare be taken into account for the purposes of GDP measure, one can only hope our actual participation in economic life, becomes easier to determine than is presently the case.