Dinner Party Economics Analysis
After reading the introduction section of Dinner Party Economics, it is clear to know that when people discuss macroeconomics, the first important thing they need to deal with is the problem of measurement. In order to see the economy as a whole, we should measure the right things accurately. In the following contents, some issues around measurement of three key concepts in macroeconomics will be discussed.
The first issue is about the measurement of economic welfare. Economic welfare broadly refers to the level of happiness of people and their living standards or well-being. According to Roefie Hueting, welfare is depending on factors like employment, working conditions, income distribution, and leisure time (Hueting, 2011). Although a lot of people tend to use money to measure their living standards, the general level of welfare is complicated to measure because people may have diverse opinions on the definition of happiness and many invisible factors cannot be measured. For instance, Dinner Party Economics summarize the factors that influence human happiness into three sets, which are personality and demographic traits, political factors and economic factors (Adomait & Maranta, …show more content…
The issue we need to face is that when we use the measurement of GDP as a measure of total production, two types of production are not calculated in GDP. One is underground economy, and another one is household production. The authors of Dinner Party Economics use a farmer as an example to explain it. When the farmer wants to make his own bread, he will keep some grain for himself (Adomait& Maranta, 2014). The bread made by the farmer is household production; there is no effective way to verify the accurate value of this kind of production. As a result, the measurement of GDP always underestimates the true value of total
The first issue is about the measurement of economic welfare. Economic welfare broadly refers to the level of happiness of people and their living standards or well-being. According to Roefie Hueting, welfare is depending on factors like employment, working conditions, income distribution, and leisure time (Hueting, 2011). Although a lot of people tend to use money to measure their living standards, the general level of welfare is complicated to measure because people may have diverse opinions on the definition of happiness and many invisible factors cannot be measured. For instance, Dinner Party Economics summarize the factors that influence human happiness into three sets, which are personality and demographic traits, political factors and economic factors (Adomait & Maranta, …show more content…
The issue we need to face is that when we use the measurement of GDP as a measure of total production, two types of production are not calculated in GDP. One is underground economy, and another one is household production. The authors of Dinner Party Economics use a farmer as an example to explain it. When the farmer wants to make his own bread, he will keep some grain for himself (Adomait& Maranta, 2014). The bread made by the farmer is household production; there is no effective way to verify the accurate value of this kind of production. As a result, the measurement of GDP always underestimates the true value of total