Interesting discussion at Imperial today.
1. The health of a nation can be thought of as an outcome (e.g. premature death) and/or a stock (the number of heavy smokers) and/or a flow (number of operations performed per year).
2. GDP is a flow. It is the flow of output via people purposefully employed in producing that output flow. It isn't outcomes. So a healthy society via social norms or parents helping their children produces an outcome but not an output. The output of health is operations done, patients seen. Which can of course be measured better.
3. Missing markets. Well, people at home are producing things as well. Not only with modern working from home, but reading to children, looking after family all of which produces a flow of services. But, we don't typically have that included in GDP since we don't know what price to allocate to that activity, since it's not an activity that's sold in the market. We could make some assumptions e.g. by taking the market price of a carer working for a care home but typically we don't do this.
4. So, GDP doesn't necessarily measure well-being.
5. In our Indigo Prize essay we explain more on GDP as a flow, adding up the flow of iPads, pencils and 737s, and going beyond GDP. And the ONS produces a dashboard of health outcome indicators.
