You probably have never celebrated the existence of the economic measure known as gross domestic product or GDP. Perhaps you should. The Bureau of Economic Analysis recently listed GDP as one of the greatest inventions of the 20th century. According to writer Fred Andrews, GDP was devised during the Great Depression when President Franklin Roosevelt’s New Deal needed a gauge to determine how well programs were working and the economy was faring.
That early version proved invaluable during the conduct of the war as the nation struggled to determine how to allocate its scarce resources between civilian and military priorities. The measure is far from perfect. Beyond errors and oversights in data collection, a major omission comes in the form of the work we do for ourselves. If you go to a restaurant, that counts in GDP. But if you cook for yourself, it doesn’t.
If you think about it, under either circumstance, output is the same. Despite that and other considerations, Diane Coyle, a British Economist, recently authored GDP: A Brief but Affectionate History. The book highlights many deficiencies associated with this metric, but ultimately celebrates it.