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vidarh12/09/20241 replyview on HN

In both income and expenditure-based GDP calculations income or consumption by households are part of the calculation (which means the calculations will not give the same result).

You can make an argument that if the hypothetical workers are salaried they're not technically paid for any given task, while I'd argue that there was an opportunity cost (they could have done other work than digging/filling it in), so there's some subjectivity to it.

My stance is that if it was done as part of paid work, they were paid to carry out the task as there's at least in aggregate if not per every one individual event an opportunity cost in having them do that work instead of something else, and so part of their consumption was paid for by the labour for those tasks, and hence they affect GDP.

That the output does not add value for the procurer of that labour does not nullify the expenditure on that labour. Whether you're calculating GDP on income or expenditure, those add to GDP either as income for the workers or an expenditure for the employer.


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_heimdall12/09/2024

Sounds like you prefer expenditure or income calculations over production. That makes sense and I think I'd agree.

I'm not sold on tying it back to opportunity cost though. That may require knowing the potential value of work that could have been done instead. It also means that we could view GDP as the potential economic value if everything is optimized, regardless of what is actually produced. That feels wrong to me at first glance but I'd have to really dig into it further to have a more clear argument why.

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