Production and Welfare: Progress in Economic Measurement

Citation:

Jorgenson, Dale W. “Production and Welfare: Progress in Economic Measurement.” Journal of Economic Literature (Forthcoming).

Abstract:

While the GDP was intended by its originators as a measure of production, the absence of a measure of welfare in the national accounts has led to widespread misuse of the GDP to proxy welfare. Measures of welfare are needed to appraise the outcomes of changes in economic policies and evaluate the results. Concepts that describe the income distribution, such as poverty and inequality, fall within the scope of welfare rather than production. This paper reviews recent advances in the measurement of production and welfare within the national accounts, primarily in the United States and the international organizations.  Expanding the framework beyond the national accounts has led to important innovations in the measurement of both production and welfare.[1] JEL Codes: C8, D6, I3, O4.

 

[1] Acknowledgements: The author is grateful to his collaborators on economic measurement, many for very helpful comments on earlier versions of this paper – Barbara Fraumeni, Frank Gollop, Mun Ho, Steven Landefeld, Koji Nomura, Jon Samuels, Paul Schreyer, Daniel Slesnick, Kevin Stiroh, Marcel Timmer, and Khuong Vu. He is also grateful for comments from Bart van Ark, Diane Coyle, William Nordhaus, Nicholas Oulton, Dirk Philipsen, Rebecca Riley, Amartya Sen, and Peter van de Ven, and from the Office of National Statistics (U.K.) and the Bureau of Economic Analysis (U.S.). He would like to thank the Editor and two anonymous referees for their comments and suggestions. Financial support for this research was provided by the Donald Marron Center for Economic Data at Harvard University. None of the foregoing is responsible for any remaining deficiencies of the paper.