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Production and Welfare: Progress in Economic Measurement

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  • Dale W. Jorgenson

Abstract

While the GDP was intended by its originators as a measure of production, the absence of a measure of welfare in the national accounts has led to widespread misuse of the GDP to proxy welfare. Measures of welfare are needed to appraise the outcomes of changes in economic policies and evaluate the results. Concepts that describe the income distribution, such as poverty and inequality, fall within the scope of welfare rather than production. This paper reviews recent advances in the measurement of production and welfare within the national accounts, primarily in the United States and the international organizations. Expanding the framework beyond the national accounts has led to important innovations in the measurement of both production and welfare.

Suggested Citation

  • Dale W. Jorgenson, 2018. "Production and Welfare: Progress in Economic Measurement," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 867-919, September.
    • Handle: RePEc:aea:jeclit:v:56:y:2018:i:3:p:867-919
    Note: DOI: 10.1257/jel.20171358
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    Citations

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    Cited by:

    1. Robert J Barro, 2021. "Double Counting of Investment," The Economic Journal, Royal Economic Society, vol. 131(638), pages 2333-2356.
    2. Fahd Rehman & Russel J. Cooper, 2023. "Effective GDP: A Cross‐Country Comparison," The World Economy, Wiley Blackwell, vol. 46(3), pages 619-652, March.
    3. Paul Schreyer, 2021. "Framing Measurement Beyond GDP," CEPA Working Papers Series WP172021, School of Economics, University of Queensland, Australia.
    4. Ronzon, Tévécia & Iost, Susanne & Philippidis, George, 2022. "An output-based measurement of EU bioeconomy services: Marrying statistics with policy insight," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 290-301.
    5. Brynjolfsson, Erik & Collis, Avinash & Diewert, Erwin & Eggers, Felix & FOX, Kevin J., 2019. "GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy," Microeconomics.ca working papers erwin_diewert-2019-6, Vancouver School of Economics, revised 27 Mar 2019.
    6. Ajayi, V. & Pollitt, M .G., 2022. "Green growth and net zero policy in the UK: some conceptual and measurement issues," Cambridge Working Papers in Economics 2255, Faculty of Economics, University of Cambridge.
    7. Günseli BERIK, 2020. "Measuring what matters and guiding policy: An evaluation of the Genuine Progress Indicator," International Labour Review, International Labour Organization, vol. 159(1), pages 71-94, March.
    8. Bert M. Balk, 2020. "A novel decomposition of aggregate total factor productivity change," Journal of Productivity Analysis, Springer, vol. 53(1), pages 95-105, February.
    9. Chaopeng Guo & Pengyi Zhang & Bangyao Lin & Jie Song, 2022. "A Dual Incentive Value-Based Paradigm for Improving the Business Market Profitability in Blockchain Token Economy," Mathematics, MDPI, vol. 10(3), pages 1-24, January.
    10. Nicholas Oulton, 2022. "The Link Between the Standard of Living and Labour Productivity in the UK: A Decomposition," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 187-211, Spring.
    11. Nicholas Oulton, 2023. "The effect of changes in the terms of trade on GDP and welfare: A Divisia approach to the System of National Accounts," Manchester School, University of Manchester, vol. 91(4), pages 261-282, July.
    12. Nicholas Crafts & Pieter Woltjer, 2021. "Growth Accounting In Economic History: Findings, Lessons And New Directions," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 670-696, July.
    13. Angus Deaton & Paul Schreyer, 2022. "GDP, Wellbeing, and Health: Thoughts on the 2017 Round of the International Comparison Program," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 1-15, March.
    14. Theo Santini & Ricardo Azevedo Araujo, 2021. "Productivity growth and sectoral interactions under Domar aggregation: a study for the Brazilian economy from 2000 to 2014," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-30, December.
    15. Josh Martin & Rebecca Riley, 2023. "Productivity measurement - Reassessing the production function from micro to macro," Working Papers 033, The Productivity Institute.
    16. Kutay Cingiz & Hugo Gonzalez-Hermoso & Wim Heijman & Justus H. H. Wesseler, 2021. "A Cross-Country Measurement of the EU Bioeconomy: An Input–Output Approach," Sustainability, MDPI, vol. 13(6), pages 1-39, March.
    17. Yukiko Hashida & Eli P. Fenichel, 2022. "Valuing natural capital when management is dominated by periods of inaction," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 791-811, March.
    18. Charles R. Hulten & Leonard I. Nakamura, 2022. "Is GDP Becoming Obsolete? The “Beyond GDP” Debate," NBER Working Papers 30196, National Bureau of Economic Research, Inc.
    19. Doyle, Matthew & Skuterud, Mikal & Worswick, Christopher, 2023. "The economics of Canadian immigration levels," CLEF Working Paper Series 58, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    20. Lejla TERZIĆ, 2020. "Is there a relationship between economic welfare and innovation performance? Evidence from selected European countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(625), W), pages 159-168, Winter.
    21. Milan Zafirovski, 2024. "Distributive justice revisited in a comparative setting: the fairness of wages in OECD countries and modalities of society," SN Business & Economics, Springer, vol. 4(1), pages 1-44, January.
    22. Sevilla, J.P. & Stawasz, Andrew & Burnes, Daria & Poulsen, Peter Bo & Sato, Reiko & Bloom, David E., 2019. "Indirect costs of adult pneumococcal disease and productivity-based rate of return to PCV13 vaccination for older adults and elderly diabetics in Denmark," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I20 - Health, Education, and Welfare - - Education - - - General

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