Issues with the measurement of major economic concepts- By Deep Mukherjee
In the first few chapters of the book Dinner Party Economics by Richard Maranta and Eveline Adomait, there were many new topics that are measured for data and decision-making. However, there are some issues regarding the measurement of the CPI and Inflation, the GDP and economic welfare, and the money supply that I would like to highlight. Firstly, there are a couple issues regarding the measurement of the consumer price index (CPI) which in turn is used to measure inflation. The CPI “basket” is not usually up to date and it is very easy to have the consumer choices and essentials change dramatically when that possibility is never accounted for. Also, the fact that …show more content…
“When computing GDP, goods and services sold in the marketplace are valued at market prices. However, some goods are not sold in the marketplace, and these do not have market prices. Thus, the value of these items has to be estimated, or imputed.” [ ] This is the case with many different major markets for example the food and restaurant market; the food that customers consume at a restaurant is accounted for in the GDP however, the food that the same customer eats at home is not measured accurately or perhaps at all besides using the values of grocery to “estimate” the price of a particular meal. Also, the effect of natural disasters is measured based on what is lost and the cost to fix but never considers the value of the pain (both psychologically and physically) of all the survivors and those injured so how can GDP reliably tell us about a person’s well being. “I can already hear object that the really important things in life like love, friendship and good feelings can’t be measured by money” (Page 18- Dinner Party Economics). Something like YouTube, a free service provides thousands of hours of leisure to people everyday but it is not accounted for in the
In the first few chapters of the book Dinner Party Economics by Richard Maranta and Eveline Adomait, there were many new topics that are measured for data and decision-making. However, there are some issues regarding the measurement of the CPI and Inflation, the GDP and economic welfare, and the money supply that I would like to highlight. Firstly, there are a couple issues regarding the measurement of the consumer price index (CPI) which in turn is used to measure inflation. The CPI “basket” is not usually up to date and it is very easy to have the consumer choices and essentials change dramatically when that possibility is never accounted for. Also, the fact that …show more content…
“When computing GDP, goods and services sold in the marketplace are valued at market prices. However, some goods are not sold in the marketplace, and these do not have market prices. Thus, the value of these items has to be estimated, or imputed.” [ ] This is the case with many different major markets for example the food and restaurant market; the food that customers consume at a restaurant is accounted for in the GDP however, the food that the same customer eats at home is not measured accurately or perhaps at all besides using the values of grocery to “estimate” the price of a particular meal. Also, the effect of natural disasters is measured based on what is lost and the cost to fix but never considers the value of the pain (both psychologically and physically) of all the survivors and those injured so how can GDP reliably tell us about a person’s well being. “I can already hear object that the really important things in life like love, friendship and good feelings can’t be measured by money” (Page 18- Dinner Party Economics). Something like YouTube, a free service provides thousands of hours of leisure to people everyday but it is not accounted for in the