Do you contribute to South Africa's GDP by reading this post? Traditionally, had I written a letter, I would have required 220 envelopes and 220 stamps to send this note to those subscribed to this blog. It would have clearly registered as a tiny contribution to the country's GDP? And I would have probably charged you to receive this letter, say R20 per individual, which would also have been recorded in the C or the X of GDP. But when you read this for free on your PC or iPad or phone, is it registered as part of our GDP? No. Similarly, if we search for the telephone number of the local restaurant on Google, or the weather prediction for tomorrow on yr.no, has anything been added to GDP? No. How do we measure the 'free' goods and services all of us consume everyday? We don't. But because our utility (or happiness or satisfaction) has increased significantly through these services (I assume it has if you've read this far), it could only mean that we are underestimating GDP or, put differently, that GDP is incapable of measuring the vast gains from technological progress we've made over the last three decades.
Michael Jordaan: Freeconomics is the future
Michael Jordaan: Freeconomics is the future
Michael Jordaan: Freeconomics is the future
Do you contribute to South Africa's GDP by reading this post? Traditionally, had I written a letter, I would have required 220 envelopes and 220 stamps to send this note to those subscribed to this blog. It would have clearly registered as a tiny contribution to the country's GDP? And I would have probably charged you to receive this letter, say R20 per individual, which would also have been recorded in the C or the X of GDP. But when you read this for free on your PC or iPad or phone, is it registered as part of our GDP? No. Similarly, if we search for the telephone number of the local restaurant on Google, or the weather prediction for tomorrow on yr.no, has anything been added to GDP? No. How do we measure the 'free' goods and services all of us consume everyday? We don't. But because our utility (or happiness or satisfaction) has increased significantly through these services (I assume it has if you've read this far), it could only mean that we are underestimating GDP or, put differently, that GDP is incapable of measuring the vast gains from technological progress we've made over the last three decades.