GDP: A Brief but Affectionate History - Revised and expanded Edition

by Diane Coyle

Overview

How GDP came to rule our lives—and why it needs to change

Why did the size of the U.S. economy increase by 3 percent on one day in mid-2013—or Ghana's balloon by 60 percent overnight in 2010? Why did the U.K. financial industry show its fastest expansion ever at the end of 2008—just as the world’s financial system went into meltdown? And why was Greece’s chief statistician charged with treason in 2013 for apparently doing nothing more than trying to accurately report the size of his country’s economy? The answers to all these questions lie in the way we define and measure national economies around the world: Gross Domestic Product. This entertaining and informative book tells the story of GDP, making sense of a statistic that appears constantly in the news, business, and politics, and that seems to rule our lives—but that hardly anyone actually understands.

Diane Coyle traces the history of this artificial, abstract, complex, but exceedingly important statistic from its eighteenth- and nineteenth-century precursors through its invention in the 1940s and its postwar golden age, and then through the Great Crash up to today. The reader learns why this standard measure of the size of a country’s economy was invented, how it has changed over the decades, and what its strengths and weaknesses are. The book explains why even small changes in GDP can decide elections, influence major political decisions, and determine whether countries can keep borrowing or be thrown into recession. The book ends by making the case that GDP was a good measure for the twentieth century but is increasingly inappropriate for a twenty-first-century economy driven by innovation, services, and intangible goods.

Product Details

ISBN-13:	9780691169859
Publisher:	Princeton University Press
Publication date:	09/22/2015
Edition description:	Revised and expanded Edition
Pages:	184
Product dimensions:	5.40(w) x 8.40(h) x 0.60(d)

About the Author

Diane Coyle is professor of economics at the University of Manchester. She runs the consultancy Enlightenment Economics, and as well as a regular blog, she is the author of numerous books, including The Economics of Enough and The Soulful Science: What Economists Really Do and Why It Matters (both Princeton).

Table of Contents

Note on the Paperback Edition vii

Introduction 1

ONE From the Eighteenth Century to the 1930s: War and Depression 7

TWO 1945 to 1975: The Golden Age 43

THREE The Legacy of the 1970s: A Crisis of Capitalism 61

FOUR 1995 to 2005: The New Paradigm 79

FIVE Our Times: The Great Crash 95

SIX The Future: Twenty-first-Century GDP 123

Acknowledgments 147

Notes 149

Index 161

What People are Saying About This

From the Publisher

"Diane Coyle renders GDP accessible and introduces a much-needed historical perspective to the discourse of what we measure and why. A must-read for those interested in the far-reaching impact of GDP on the global economy, just as we seek ways to go beyond it."—Angel Gurría, secretary-general of the Organisation for Economic Co-operation and Development

"Countries are judged by their success in producing GDP. But what is it and where do those numbers reported on television come from? Diane Coyle makes GDP come to life—we see its strengths and its fallibilities, and we learn to understand and respect both."—Mervyn King, governor of the Bank of England, 2003-2013

"This is an engaging and witty but also profoundly important book. Diane Coyle clearly and elegantly explains the fundamental difficulties of GDP—and how this headline figure is liable to radical change by apparently simple changes in method. She also provides a nice treatment of alternative proposals such as happiness surveys."—Harold James, author of Making the European Monetary Union

"GDP: A Brief But Affectionate History is a fascinating 140-page book that I cannot recommend highly enough. This is simply the best book on GDP that I've ever seen."—John Mauldin

"Well written, interesting, and useful, this book will appeal to many readers. I learned a lot from it."—Robert Hahn, University of Oxford

Editorial Reviews

Winner of the 2015 Bronze Medal in Economics, Axiom Business Book Awards

"One of The Wall Street Journal’s Best Books of 2014"

One of Choice's Outstanding Academic Titles for 2014

"One of FA-mag.com’s Books of the Year 2014"

"One of "The Books Quartz Read" in 2014"

"One of Minnpost.com’s ‘Three (plus) books for the econ buff on your list’ 2014"

Longlisted for the Financial Times and McKinsey Business Book of the Year 2014

From the Publisher

"[A] little charmer of a book."

Wall Street Journal

"Coyle has written an engaging, introductory to mid-level book on the GDP that makes sense of a statistic that hardly anyone actually understands. . . . It does not require any training in economics, but it covers many topics that even professional economists would find beneficial, including an argument that GDP is an increasingly inappropriate measure for the 21st century."

Choice

"[A] little charmer of a book."

Wall Street Journal

Coyle takes the reader on a whistle-stop tour of the development workhorse of economic modeling and analysis. . . . The book developed out of a talk by the author in 2011 and it retains the liveliness of a performance.

Central Banking Journal

2014-03-31
It's inadequate and misleading, but it's the best we've got. No, not Congress—we're talking about gross domestic product, the measure that economists use to tell us how we're doing. Put it this way: Music companies bemoan ever falling levels of sales, fewer and fewer units moved of what used to be surefire best-sellers. Does this mean that no one is listening to music? Of course not, observes British economic consultant Coyle: We are awash in music, but no one is paying for it in what has been called the "everything's free economy." GDP, as the author notes, is a "made-up entity" that has been with us only since the World War II era, "an abstract statistic derived in extremely complicated ways, yet one that has tremendous importance." Designed to give some sort of statistical parity to different kinds of economies (agricultural and industrial, say), so that apples could be compared to oranges and still be a fruitful index of well-being, GDP has built-in biases. In at least one important dimension, it puts perhaps undue emphasis on the idea of growth—the sort of mass production that, as Coyle notes, allowed cheap penicillin into the market, among other items in a technological "flood of innovations" that ordinary people could afford. But in a time of increasing abstraction and specialization, when so much economic activity centers on consuming and the servicing of consumers rather than actually making anything, can GDP serve as a reliable measuring stick? It's a flawed instrument, Coyle allows, before urging that, even in the wake of the Great Recession, and for all its inability to gauge "happiness" and other less quantifiable aspects of our lives, "we should not be in a rush to ditch GDP." Coyle does good work explicating a topic that few understand, even if it affects each of us daily. A pleasure for facts-and-numbers geeks, though accessibly written and full of meaningful real-world examples.

Kirkus Reviews