04 October 2012

A Letter in the FT in Response to Martin Wolf

The FT has published a letter from me responding to Martin Wolf's column earlier this week on economist Robert's Gordon's claims of a stair step decline in per capita US GDP growth rates since 1950 as evidence supporting a thesis of an looming collapse in growth.

Here is an excerpt from my letter (the link to the graph is added here):
From 1950 to 2006, the period covered by Prof Gordon’s analysis, the rate of growth in US per capita GDP changed very little if at all, according to the Bureau of Economic Analysis. Debating the prospects for future economic growth in the context of innovation and productivity is important; however, such arguments should be grounded in accurate data. Prof Gordon describes his thesis as a “provocative fantasy” – a characterisation that I find to be completely accurate.
The full letter is here. Background on this issue can be found here and here and here.

7 comments:

sien said...

How long would it take before a trend would be visible?

Does Japan have a statistically significant reduction in GDP per capita growth?

The Cycling Economist Papa said...

What about the fact that GDP falls prey to market failures: because prices are no longer connected to the use value of the commodities due to changes in the financial sector (at least in an awful lot of cases); it seems to me that GDP over the last 20 years shouldn't even be compared with that prior.

Maybe at one time GDP per capita was a decent proxy for standards of living, but today?

I'm thinking along the lines of "Mismeasuring Our Lives" by Stiglitz, Sen & Fitoussi...

What do you think Roger?

~Justin @ ITIF

Roger Pielke, Jr. said...

-2-The Cycling Economist Papa

Hi Justin, I am very sympathetic to such arguments.

That said, efforts to improve upon GDP with an alternative single metric of well-being have not fared so well:

http://rogerpielkejr.blogspot.com/2012/08/does-more-income-mean-more-well-being.html

All best!

Roger Pielke, Jr. said...

UPDATE: Gordon has emailed me to confirm that there is an error in his paper's description of the breakpoints that he used in the stair-step figure. I am requesting permission to post up his response.

AJ said...

Roger, I see that your comments have been noted in a Freakonomic Blog entry.

http://www.freakonomics.com/2012/10/05/challenging-the-end-of-growth-argument/

Roger Pielke, Jr. said...

-5-AJ

Thanks! This would seem to be a perfect subject for a Freakonomics focus ...

Udik said...

What you don't seem to consider in the closing part of your op-ed, is that the scientific community is itself made of normal people, watching tv and reading newspapers. Therefore, they're not only beneficiaries of the thrill of appearing in the media, but also victims of their sensationalistic information. This in turn increases their tendency to be biased in their research, or simply to build on unproven assumptions, and creates a positive feedback that pushes the climate hysteria even more.

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