Don’t blame GDP for a slow post-covid reopening

24th June, 2021

“As more of everyday life returns, we must not forget about the things that quietly, efficiently (perhaps almost without us noticing) offer some of the greatest benefits of all.”

Those were the words recently of Lord Sebastian Coe, twice an Olympic gold medallist and current president of World Athletics. Coe was focused on Parkruns, free weekly running events around the UK and indeed the world put on by the Parkrun charity. Although organised outdoor sports have been legal in England for many weeks now, Parkrun has been slower to be able to reopen for adults – the plan is to open on 26 June.

But Coe’s point holds more broadly: as the widely vaccinated UK continues to open up, there have been some curious discrepancies in what is possible and what is not. In recent days, for example, I attempted a number of steps towards normality. I went to a library. I went swimming. I went to a book signing.

It was great to be out and about, but the overall experience was far from a return to 2019. The book signing was done not at a book festival, but alone in a warehouse in Didcot, after overcoming considerable red tape. The swimming pool, lent out by a local school, had kept changing rooms closed as a precaution. I changed poolside under a towel, which was not a spectacle anyone wanted. The library desk was precious: social distancing means the library can’t come close to accommodating all the readers who want to be there.

I welcome these indignities and inconveniences if they help bridge the gap between our tragic winter and a summer of safety and freedom. But there was a striking disparity. While the library, warehouse and pool were in full plague mode, I also visited a bustling London restaurant with colleagues that was so normal as to be disorienting. Had I stepped into a time machine? The only sign that this was 2021 was that the staff wore masks.

So what explains the difference? Critics of economics might offer a simple answer: gross domestic product or GDP, the most common way in which we measure the size of our economy. Restaurants, being a commercial enterprise in which money changes hands, contribute directly to GDP. The other activities do not.

Fully reopening every desk in a library would in principle increase the value of educational services produced, but such a change is unlikely to register in our national accounts. Nor is a book signing, provided free of charge in the hope of drumming up business. And Parkrun is a charity whose financial footprint is minuscule relative to its presence as a national pastime.

In a speech in 1968, presidential hopeful Robert Kennedy pointed to what measures of economic growth leave out: “Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our gross national product . . . counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage . . . Yet the gross national product does not allow for the health of our children . . . the beauty of our poetry or the strength of our marriages.”

Noble sentiments and mostly true. But while Kennedy juxtaposes the loss of “personal excellence and community values” with the fact that GNP does not include “the beauty of our poetry”, he stops short of explicitly connecting the two. That is wise. It would be absurd to suggest that the cure for bad poetry and bad marriages is reform of the Office for National Statistics.

It’s easy to blame GDP, but this is not about GDP. All over the UK, people are responding to incentives. For a restaurant, reopening is a matter of survival, and (currently modest) Covid-19 risks will be tolerated. In contrast, the local school does not depend on income from amateur swimming clubs; Oxford university’s Bodleian Libraries, more than four centuries old, are in no imminent danger if they cannot increase capacity tomorrow. And the local authorities and landowners who provide the land on which Parkruns take place are in no great hurry.

If the Office for National Statistics suddenly decided that Parkruns were worth a few billion pounds of GDP, would that alter any of these local decisions? I fail to see how.

Even though some of the best things in life are free, it should hardly be a surprise that people can be cautious when accommodating a voluntary effort while moving mountains when their own jobs are on the line. Thanks to the UK’s successful vaccine rollout, I suspect libraries and swimming clubs and Parkruns will all catch up with restaurants soon.

But there is a broader lesson here about the nature of change. Campaigners attack GDP for distorting national priorities. It is indeed an imperfect measure of economic growth and it does not even pretend to be a measure of widespread flourishing. But GDP does not figure as highly in national priorities as people seem to think. Just think of the UK’s three major policy thrusts over the past decade: first austerity, then Brexit, and finally lockdowns. Whatever you think of these policies, none of them ever pretended to be about maximising GDP.

Looking ahead, the next great challenge is climate change. We won’t meet it by reformulating GDP. We’ll meet it by adopting policies and norms that change the behaviour of businesses, local governments and individuals. Such decisions are not made while poring over national accounts.

Written for and first published in the Financial Times on 28 May 2021.

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