Thread by @blair_fix

I think real GDP is a garbage indicator. Here is why:

link.springer.com/article/10.100…

Preprint is here: osf.io/preprints/soca…

The problem is that real GDP uses prices as the unit of analysis. But prices fail the most basic requirement of a unit --- to be UNIFORM. Here is price change in 10 selected commodities. The unit of "price" is spectacularly unstable:

And no, I am not cherry picking data. Here is price change for all US commodities in the consumer price index.

Think of this as a changing meter stick. The price of every commodity is a meter stick, telling us how to compare one commodity with another. But every meter stick changes in different ways over time. It makes objective measurement impossible.

Then there is the problem of QUALITY change. When a commodity changes QUALITY, economists equate this with a change in QUANTITY. In GDP, better computers = more computers. But how do we measure this quality change?

Economists attempts to measure quality change are laughable. Check out the disagreement over computer quality change.

When we project this over time (assuming no actual growth of computers), here's how wildly our estimates of computer output would clash

Jonathan Nitzan wrote the seminal critique of how economists measure quality change. Read it and be doomed to know that real GDP is meaningless. @BichlerNitzan

bnarchives.yorku.ca/137/1/890101N_…

Then there is the problem of imputation. GDP includes the fictitious income that house owners (do not) pay to themselves. economicpolicyresearch.org/econ/2018/NSSR…