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Archive for June 29th, 2009

Nate Silver (of election projection fame) has an excellent post demonstrating the shortsightedness of harping on GDP numbers, in this case with regards to climate change. He takes to task Jim Manzi, whose argument is that even pessimistic assumptions point to a 5% reduction in GDP from global warming down the road. Silver endeavors to demonstrate that a 5% reduction in GDP can have extraordinary human costs, by taking low-GDP countries off the map. He manages to wipe out 43% of the Earth’s population.

I think Silver’s point provides a much needed dose of realism in looking at economic data. If someone told you upfront that global warming will kill upwards of 2 billion people, rather than reduce GDP by 5%, they would be much more apt to take action. Or, if we relied on a measure like Green GDP in our national accounts, and learned that GGDP would actually decrease by, say, 30% if we didn’t act on climate change, then again, we would be more ready for action.

GDP seems like a nice idea as an all-encompassing (and seemingly neutral) means of measuring the value of all the goods and services that people buy. However, when it comes to climate change, informal economies, and a host of other issues, GDP comes up woefully short.

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