Should-Read: Austin Clemens and Heather Boushey: What if we took equity into account when measuring economic growth?

December 4, 2017
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Should-Read: Austin Clemens and Heather Boushey: What if we took equity into account when measuring economic growth?: “The four measures shown in the graphs above could all be reasonable ways of thinking about measuring progress in the U.S. economy…

…Each requires making a value judgement about what kind of growth we value. This is no less true of GDP growth…. GDP growth can paint a very misleading picture of the health of the economy, suggesting that we are in a robust recovery when, in fact, only a small number of households are benefitting. Furman is right to suggest that this is a debate economists and policymakers should have. Unfortunately, the economic indicators reported by the U.S. Bureau of Economic Analysis do not provide sufficient detail to calculate, for example, the mean log of income…. The National Income and Product Accounts provide no distributional information at all. The task of decomposing growth by income quantile has fallen to academic economists. Until the BEA takes up the task of reporting distributional income totals, decisionmakers will continue to lean on GDP growth, and they will continue to be misled by it…

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