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Lumifer comments on Open Thread, November 1 - 7, 2013 - Less Wrong Discussion
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Very interesting, thank you.
I have a pet interest -- carefully looking at how standard, universally-accepted, real-life, empirical data is collected and produced and whether it actually represents what everyone blindly assumes it does. In the field of economics, for example, closely examining how, say, the GDP or the inflation numbers are calculated is... illuminating.
Details?
The problem is that the problems aren't summarizeable in a neat half a page list. And it's not like the calculations are wrong, rather they are right under a certain set of assumptions and boundary conditions -- and the issue is that people forget about these assumptions and conditions and just assume they're right unconditionally.
For an introduction take a look at e.g. Shadowstats. I don't necessarily agree with everything there, but it's a useful starting point.
Thanks.
I twitch when changes in GDP are reported to a tenth of a percent-- it seems to me that it couldn't be measured with such precision. Do you think I'm being reasonable?
My own (uninformed) intuition is that GDP changes would be much more accurate than absolute GDP values, just because systematic errors could largely cancel out.
GDP as reported is the product of a particular well-defined calculation. That product can easily be calculated to whatever precision you feel like.
When you say "it couldn't be measured with such precision", how do you define the Gross Domestic Product that couldn't be measured precisely?
I'm assuming that the GDP is some sort of measure of the health of the economy-- that's why people are concerned with it. The health of the economy seems to me like rather an approximate sort of thing.
GDP -- Gross Domestic Product -- basically means the sum of the value (in the economic sense) of all goods produced domestically during a given period, e.g. a year.
If you want to measure the "health of the economy", that's quite different. You'll have to define what do you mean by that expression and then decide which measurements do you want to consider. For example, some people might consider the unemployment rate to be one those measurements, or, say, the Gini index, or the median income, or... the possibilities are endless.
Why do people measure the value of all the goods produced domestically during a year?
If nothing else, there has to be a fudge factor because some of the economy is underground.
From Wikipedia: "GDP was first developed by Simon Kuznets for a US Congress report in 1934. ... After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country's economy."
Yes, the GDP number is, of course, imprecise. By itself it's not a problem -- most of our measurements are imprecise.
I am not sure what are you getting at. Do you think that GDP is useless or cannot be measured or what?