Unit 3: Why GDP is Inherently Sexist Flashcards
According to Diane Cole, what is the biggest problem with GDP? Explain how this can be used to argue that GDP is a ‘sexist’ metric for measuring economic well being.
These include two key omissions: changes in environmental indicators; and unpaid work in the home and volunteering. Women do a majority of this unpaid work (on average in the OECD countries women do about twice as much, 150 minutes a day more, as men in the home). Because it is not measured, it is generally overlooked by economic policy.
How might counting unpaid work in the home affect GDP calculations? Explain by referring to specifics from the article.
“The omission of unpaid services of housewives from national income
computation distorts the picture.” He concluded that in principle, unpaid work in the home
should be included in GDP, but there were practical difficulties in estimating the amount of work and its valuation. Given that there are practical difficulties in every aspect of gathering
data to estimate GDP, it is hard to avoid the suspicion that in the end this just was not seen as
a sufficiently important question because it “only” concerned women and housework.
In a well known alternative to GDP proposed in 1972 by William Nordhaus and James Tobin, the “Measure of Economic Welfare” (MEW), their estimate for the amount and value of “non-market production’ in the mid-1960s was equivalent to about 40% of conventionally measured economic output economy. More recently, statisticians have published occasional estimates. In a 2011 study, the OECD concluded that home production would add between 20% and 50% to the GDP of its member countries. The US Bureau of Economic Analysis said it would have added 26% to US GDP in 2010.
Identify and explain the two reasons why unpaid work in the home might soon factor into statistics for economic output.
Old barriers are breaking down – One is that the amount of one kind of unpaid voluntary work is on the increase and is clearly making a valuable economic contribution. That is the voluntary provision of free digital goods – not “free” online content in fact paid for by selling personal data to advertisers, but genuinely voluntary contributions.
The increase in digital volunteering means there is an unmeasured contribution to valuable
economic activity. More importantly, it blurs the clear boundary between “home” and
“economy” assumed in the conventional definition of GDP. People who provide such content
online might be doing some of it as part of a paid job, some as a hobby; or they might hope it
will turn into paid work later, or provide some marketed services using the free content as a
shop window. In any case, the old boundary is breaking down. The recent report on UK economic statistics by Sir Charles Bean pointed out that there are several ways the digital economy presents a challenge to conventional economic statistics, the “production boundary” question among them.
2nd reason -
Demographic trends in many countries mean the decision by women about whether to work unpaid at home or for pay is increasingly important for public policy. Who will take care of the rapidly growing elderly population? People will end up working longer on average, and elderly people needing care will rise rapidly.
What are the policy options? Pay more – either through taxes to finance public provision or for private provision, to support these older people. Invest in domestic “capital” such as robots for cleaning or automated deliveries of meals. Or rely on unpaid caring from family members and friends, a majority of it likely to be provided by women. There needs to be a debate about which option or mix is desirable – and it should be informed by data. Until unpaid work in the home is measured properly, this important policy debate is going to take place in ignorance.
One of the reasons for question 3 has actually been partially factored into GDP over the last five years. Identify which reason and how it has come to be factored into GDP
Digital volunteering can be monetized
Important in measuring the unpaid contribution of nature to our current consumption.
The renewed interest in measuring women’s and men’s unpaid contribution to economic
activity is overdue, important in measuring the unpaid contribution of nature to
our current consumption. Economists have a high regard for markets, not only because they
ensure supplies of goods and services are matched to demands in our complex globalized
economies, but also because they reflect individuals’ own preferences and choices. However,
the longstanding focus only on marketed activities through GDP has distorted perceptions and policies.
Aside from unpaid work in the home, What problem with GDP does Diane Cole briefly mention in this article?
“Distorted perceptions/policies”, There is no good rationale for continuing
to ignore other important components of economic well-being, including women’s unpaid work. Some countries have made a start in collecting at least occasionally the data needed to estimate an equal opportunity GDP, and the new technologies could make this easier. The time has come now to reopen the 1950s debate about how we should define the economy, and ensure that GDP or its replacement counts the vital work that goes on in the home, and in the community, as well as work in the market.
