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SOME PROBLEMS INSIDE THE MEASUREMENT OF REAL NATIONWIDE INCOME
By J. L. Nicholson
(Chief Statisticion, Combined Kinrdorn Cer~trol Sfatistical Oflcc)
The Truth is one and incapable of contradiction; Every knowledge that conflicts with itself is Graceful Fiction. -W. H. Auden. I. THE GENERAL SElTING
JUST BEFORE discussing problems of technique, one ought to be clear about aims. One is hardly capable of taclcle the many and numerous problems that happen to be peculiar to the measurement of real nationwide income until one is aware the uses for which the results are intended to be used. This is the kind of idea with which few people would disagree but which, as Oscar Wilde explained about a person's face, when seen hardly ever remembered. Since estimates of real countrywide income may well have many possible objects, one should not really expect to find flawlessly general approaches to many of the complications. The correct, or perhaps most appropriate, answer for one purpose may generally differ from the right, or best suited, solution for some other goal. There would be standard agreement which the particular reason for the quotes may impact the choice of dumbbells, as well as the definition of what is included within the restrictions of monetary activity. However it may also impact the best method of making use of the available info; and you ought to even keep in mind the possibility that, in most cases, it could affect the selection of indicators. The purposes of estimates from the real countrywide income or product seem to fall into two main classes. Such quotes may be required in connection with (a) problenls concerned with the potential or perhaps actual welfare or pleasure derived simply by consumers and purchasers of final products; or perhaps (b) concerns of production, and the effective utilization of methods, the emphasis in this case staying on the developer, not the consumer. It must be accepted that the usefulness of quotes of the 145
I actually N C O M E A N D WEALTH
real natiollal income, in either connection, is very limited. They do not, certainly not without changes, and perhaps are not able to provide general quantitative measures either of economic well being, or of total end result in the productivity sense. The estimates usually correspond with, or obtain from, several generally approved definition of the national income, which in turn signifies a meaning of economic activity. Not all financial activities will need contribute, although many activities that are not regarded as economical can bring about, to total production or financial welfare. According to the spec& or general functions in mind, the concepts of productivity and welfare can even be defined in various ways. But the real nationwide product really does at least provide a starting point froin which will a evaluate, or iudex, of one kind or the other may be derived; and can alone, therefore , receive a taste - to place it zero higher - either of productivity or of well being. So much will, perhaps, this individual fairly widely admitted. But the practical ramifications of this dichotomy need to be regarded as rather thoroughly. And we should be prepared for some seemingly paradoxical results. It is worth, 1st, briefly reconsidering the ratio~zale national of income collectiong. In order to obtain an mixture of all the goods and services which with each other comprise the whole national product, each item must he valued in a certain cost, which pleading a few questions to get the moment -- is the price at which it changes hands. Some common unit of measurement is actually necessary. But you may be wondering what is the approval of valuing each item at this particular price? We might naturally make use of these prices if we merely wished to describe you see, the exchanges going on at a specific time, as well as to study the interrelationships of numerous parts of the economic system. Yet there must be more to it than this. What is it the fact that exchange price is intended to evaluate? From the point of view from the consumer the response must, I do believe, be the distribution of his expenditure...