Economists must make numerous choices to calculate market activities in an economy. The U.S. measure of GDP, for instance, does not include illegal drug sales or prostitution, both market activities. Periodically the Bureau of Economic Analysis, revises its measure of GDP to account for measurement errors and it did so in July 2013 when it will add a category of investment called “intellectual property products.” It summarizes this change in this release. The category will include such things as writing and recording music. On National Public Radio and reported by the Wall Street Journal, Wellesley economist Daniel Sichel explained that for example, the money Lady Gaga spend writing and recording her music will now be included in the BEA’s measure of GDP. According to estimates, the change will add 3 percent to GDP. You might think that this change is not controversial, but it is. Economists point out that by adding to GDP this change lowers the U.S. GDP-to-debt ratio.
First Published : June 4, 2013