The gross domestic product for the United Kingdom rose by 5% seemingly overnight, after spending on cocaine and prostitution was (roughly) accounted for. Naturally there’s been a bit of fuss over the new estimate. Tim Harford explains why the new count isn’t such a travesty.
We need to understand three things about gross domestic product statistics. First, GDP itself is ineffable — an attempt to synthesise, for practical purposes, something that defies description. Second, the national accounts are not designed to give a round of applause to the good stuff and a loud raspberry to the bad stuff. They are supposed to measure economic transactions. And, third, anyone who thinks politicians try to maximise GDP has not been paying much attention to politicians.
After you read that, it’s also worth listening to the Planet Money podcast on GDP from a few months back. Fuzzy estimate.