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GDP doesn't measure unpaid housework

« H E Economics :: Happiness :: Jason Briggeman :: email
posted 2005.11.06 Sunday

I have a hypothesis that the government favors and promotes the measure of Gross Domestic Product over alternative all-in-one measures (such as Daniel Kahneman's idea of "National Well-Being Accounts") because GDP is readily divisible and transferable while life satisfaction is not.  In other words, the stuff of GDP can be taxed and appropriated for other uses, whereas you can't directly siphon off a portion of happiness from the populace and use it to build a "National Institute on Aging" to employ your friends in an irrelevant corner of...not even Washington, but Bethesda, Maryland.

So, I'm starting to look for evidence that supports or debunks my hypothesis.  One of the supportive tidbits I've found so far comes from an online biographical sketch of Simon Kuznets, the economist who systematized the measure of Gross National Product (the forerunner of GDP):

In the late forties...[Kuznets] broke with the Commerce Department over its refusal to use GNP as a measure of economic well-being.  He had wanted the department to measure the value of unpaid housework because this was an important component of production.  The department refused, and still does.

It would be pretty tough to redirect the product of unpaid housework, wouldn't it?

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comments (5)


1. Michael Thomas left...
2005.11.06 Sunday 1:34 pm

Just curious, why pick on the national institute on aging? I know someone who is associated with that.


2. Jason Briggeman left...
2005.11.06 Sunday 1:42 pm

Because they are the ones sponsoring Kahneman's National Well-Being Accounts. Follow my links, people!


3. Snackwell left...
2005.11.07 Monday 12:22 am

Wait, how would it help if housework was factored into GDP? It seems like the only thing that would change is that federal spending would look like a smaller number in relation to GDP and then there would be more room for expansion. Sorry, I got a "C" in undergrad econ.


4. Jason Briggeman left...
2005.11.07 Monday 12:54 am

When GDP is used as a base amount to which taxes or government spending is compared, that's a possible outcome, for sure, because a figure that included housework would be larger than GDP.

GDP is also used as a time series - in other words, looking at the change in GDP year over year. In that usage, the result is less clear. Some of the movement we see (or don't see) in GDP may be substitutions between activities that are measured by GDP (e.g., paying for food-preparation work performed by employees of Taco Bell) and activities that are not measured by GDP (e.g., preparing tacos at home). If housework could be accurately measured and added to GDP (a very generous "if"), perhaps observed fluctuations in total output are smaller or larger.

In that bio, Kuznets is said to have wanted GDP to be used as a measure of "economic well-being". It would be interesting to see where he would draw the line between "economic" well-being and, I presume, "non-economic" well-being. I personally wouldn't bother drawing such a distinction...and I think GDP is so far from being an effective measure of overall well-being that attempting to include housework would not bring it appreciably closer.

If it sounds like I'm saying it wouldn't help to include housework in GDP, it's because that's what I'm saying. My point is that government officials have a purpose in measuring GDP: to maximize or predict their income from taxes. Kahneman, and Kuznets after splitting with Commerce, don't/didn't seem to have any such purpose.


5. Michael Thomas left...
2005.11.07 Monday 10:20 am

It also makes sense that we wouldn't overestimate the productivity increase in people going out to fast food restraunts. This "service" gets monotized into the GDP measure as a result of the food service industry, whereas the impact was "hidden" when this was done at home. Clearly at the margin people are making choices between this type of housework and the monetized version, but it seems to me on the surface to be an overstated differential. To really understand how growth occurs through time, it seems that Jason's claim about Kuznets would lead to more accurate discoverys.