> Do note that peak spending on rail roads eventually amounted to ~20 percent of the US GDP in the 19th century.

When you go so far back in time you run into the problem where GDP only counts the market economy. When you count people farming for their own consumption, making their own clothes, etc, spending on railroads was a much smaller fraction of the US economy than you'd estimate from that statistic (maybe 5-10%?)

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eru 7 days ago | parent | next [-]

Yes, that was a problem back then, and is also a problem today, but in different ways.

First, GDP still doesn't count you making your own meals. Second, when eg free Wikipedia replaces paid for encyclopedias, this makes society better off, but technically decreases GDP.

However, having said all that, it's remarkably how well GDP correlates with all the goods things we care about, despite its technical limitations.

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jefftk 7 days ago | parent | next [-]

This has always been an issue with GDP, but it's a much larger issue the father back you go.

While GDP correlates reasonably well, imagine very roughly what it would be like if GDP growth averaged 3% annually while the overall economy grew at 2%. While correlation would be good, if we speculate that 80% of the economy is counted in GDP today, then only 10% would have been counted 200 years ago.

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epicureanideal 7 days ago | parent [-]

It would be great if there was a "GDP + non-transactional economy" metric. Does one exist, or is there a relatively straightforward way to construct one?

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danlitt 7 days ago | parent | next [-]

I don't think we have a way to reliably estimate the value of non-transactional goods, because by definition nobody gives them a price.

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chii 7 days ago | parent | next [-]

but an estimate could be had if you use an imputed price of similar goods/services that _are_ transactional? So the problem reduces down to counting these events - perhaps a survey and such could be used to estimate their frequency etc?

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eru 7 days ago | parent | prev [-]

Why are you so pessimistic? Just because something is hard and you get big error bars doesn't mean we can't do it at all.

If you wanted to, you could look at eg black market prices for kidneys to get an estimate for how much your kidney is worth. Or, less macabre, you can look at how much you'd have to pay a gardener to mow your lawn to see what the labour of your son is worth.

	▲	danlitt 6 days ago \| parent [-]
		"I don't think we have one", not "I don't think one can be invented"

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jefftk 6 days ago | parent | prev [-]

The most obvious way to do it would be:

* Get a sample of 100 random people or so

* For each person, have them track their time

* For each thing you have them tracked doing, estimate how much it would cost to get someone else to do it

But it pretty quickly gets difficult around questions of entertainment. If I go dancing for fun, should you count how expensive it would be to hire a professional to dance in my place? If I woodworking or knit for fun but then I also give away the things I make to my friends as presents should we count that at market value?

	▲	eru 6 days ago \| parent [-]
		> But it pretty quickly gets difficult around questions of entertainment. Not just question of entertainment, but also personal hygiene.

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pjc50 7 days ago | parent | prev [-]

I guess "GDP doesn't count you doing your own thinking" is going to become a problem.

	▲	jefftk 6 days ago \| parent [-]
		If AI continues going as quickly as it has been, humans doing their own thinking will be a very small fraction of the economy. (Not saying this is a good thing.)

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m3047 6 days ago | parent | prev [-]

Am I the only person with vehicles to wrench, a house to work on, chickens in the yard... as well as open source projects? If I'm not getting paid, I still have plenty to do which feeds me to today or prepares me for tomorrow.

Cache la poudre.

	▲	jefftk 6 days ago \| parent [-]
		There definitely are still a lot of things outside the market economy. People caring for their own kids is an enormous one. I'm not trying to make a claim about how much bigger the economy is of today's GDP, just that this has changed a lot over time in a more market direction. Which then means if you're trying to put historical numbers in perspective you need to adjust.