Re: the value of $1000

["Alan G. Isaac" <AISAAC@xxxxxxxxxxxx>]

Scitovsky is right. Roughly, GDP measures the volume of net
gain transactions, not the volume of net gain from transactions.
--Alan G. Isaac

On Sun, 03 Mar 1996 20:21:52 GMT <lintotja@xxxxxxxxxxxxx> said:
>
>I'm new to this list, and thus not aware what the range of
>interests of list members is. But I wonder if anyone would care
>to respond to this question.
>
>Tibor Scitovsky, in "The joyless economy", argues that the
>inclusion of $1000 in the national accounts implies that (1)
>someone did work, the discomfort of which was worth less than
>$1000 to him or her, and (2) services were rendered worth more
>than $1000 to someone else. Thus the sum of worker's and
>consumer's net gains could be much less or much more than the
>$1000 included in the accounts.
>
>Is there a flaw in Scitovsky's logic, or some counter-argument?
>
>I ask because on the face of it, this is one of the simplest and
>most devastating reasons (among many others) for not regarding
>GNP as a measure of welfare, or GNP growth as a legitimate target
>of policy. (It would also fatally undermine attempts to construct
>measures of welfare based on "improving" GNP, a la Nordhaus and
>Tobin, Daly and Cobb, etc.) Yet it never seems to be mentioned by
>environmentalists and other critics of growth.
>
>John Lintott