One of my favourite economic reads of 2014 was Diane Coyle’s book about an economic statistic – GDP. Whilst monarchs had been trying to take inventories of the national wealth since the Doomsday Book and earlier (so they could tax it!), the idea that you should rigorously measure economic activity is under one hundred years old. But the concept of Gross Domestic Product has now become central to the management of all economies (remember the Maastricht Criteria which based participation in the Euro area on debt and deficit ratios related to GDP? Diane’s book tells how Greece’s dubious GDP number was generated in one room above a parade of shops and without the aid of a computer). Even with banks of computers GDP is challenging to measure, subject to big revisions, and in a world of rapid technological change, arguably measuring the wrong stuff. But for us bond market participants watching Bloomberg screens, or Prime Ministers announcing triumph, it’s the big one.
In this 10 minute video Diane Coyle (@diane1859), Professor at the University of Manchester and responsible for Enlightenment Economics discusses the history of our most used economic statistic, and asks whether it’s the best we can do.
We have 10 copies of Diane’s excellent book to give away in our competition. Question: he’s regarded as one of the creators of modern GDP statistics, but in 1934 he told Congress that “the welfare of a nation can scarcely be inferred from a measurement of national income”? Who is he?