What is a better measure of (Workers’) productivity than GDP (PPP) per hour worked?

My answer on Quora:

The ideal measure is output or value-add per worker. I say ideal because true output or true value is hard to measure.

GDP has been labelled one of the greatest inventions of the 20th century, but it is not well suited for the 21st century. When output is a physical item, like a car, then it’s pretty straightforward to measure output. GDP as a measure was created when the economy was mostly about making physical stuff.

But when output is, say, a Quora answer, or a research paper, how do we measure its value? Imperfectly, at best, and GDP is not well equipped to measure this type of output, especially when there is no price involved (Quora is free but worth, well, a lot…)

In the 21st century economy, services dominate. Going forward, the digital economy will only make this challenge even more difficult. Often, data is more valuable than a good or service sold in currency units (whether fiat or digital…).

The underlying question is: How do we measure output? So far, we will have to do with GDP and all the adjustments made to it.

Rethinking GDP — Finance & Development, March 2017 (Diane Coyle)

Beyond GDP: How Our Current Metrics Mismeasure the Digital Economy (Erik Brynjolffson and Andrew McAfee)

 

 

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