No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Wednesday, October 8, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home Market Research Economy

The Measurement is Not the Thing

by TheAdviserMagazine
3 weeks ago
in Economy
Reading Time: 3 mins read
A A
The Measurement is Not the Thing
Share on FacebookShare on TwitterShare on LInkedIn


Measure what is measurable, and make measurable what is not so.

-Galileo Galilei

Any science contends with a difficult problem: there are things we want to understand, but we cannot easily measure those things.  Any tool for measurement will inherently have technical limitations (that is, limited by the technology of the time) and be subject to arbitrary choices by those doing the measuring.  Sometimes we may not even be able to directly measure the thing, instead we have to rely on proxies, or on a lack of information, to track what we’re interested in.  Consequently, the measurement one uses is not the same as the thing itself. It is merely a representation of the thing.

Unfortunately, those untrained in scientific thinking will often mistake the measurement for the thing.  This is very common in economics.  Take, for example, the Consumer Price Index (CPI).  CPI is a measurement of inflation using a basket of consumer goods.  The basic idea is that if prices are moving independently of one another, there should be limited movement in the Index.  However, if the Index is consistently changing in a certain direction, there is likely inflation (the Index is rising) or deflation (the Index is falling).  However, the Index can rise for reasons other than inflation.  If even one price changes and all else is held equal, the Index would change simply because of how the Index is calculated.  It is a weighted average of all prices in the basket.  One change therefore moves the whole Index.

To make my point more concrete, let’s say that the price of gasoline were to rise considerably and no other price were to change.  The CPI would naturally rise given gasoline is a component of the Index.  No economist would say there is inflation; inflation is a general rise in prices and this is just a single price rising.  But those who think that CPI is inflation would misunderstand and consequently misdiagnose the situation.  They confuse the measurement for the thing itself.

We see the same thing for Gross Domestic Product (GDP).  GDP is a measure of economic growth, but it is not economic growth in and of itself (nor is it a theory of economic growth).  GDP, like the CPI above, is an accounting identity that attempts to act as a proxy for economic growth.  But, like with CPI, those who confuse the measurement for the thing erroneously conclude that an increase in GDP necessarily means an increase in economic growth.  GDP is defined as New Consumption + New Investment + New Government Spending + New Net Exports.  If any of those variables change, GDP will necessarily rise.  That is true.  But it does not follow that the rise in GDP necessarily means economic growth is occurring.  America in World War 2 and the USSR showed that conclusively.  US GDP rose significantly in World War 2 because of the huge increase in government spending.  But, by many measures, people were worse off than during the Great Depression: consumer goods were hard to find because so many materials were needed for the war effort, people had to grow their own food—it was not an economy that supports a good life.  In the USSR, GDP was rapidly approaching the US.  Indeed, some were even predicting the USSR would overtake the US.  But once the USSR collapsed and we saw behind the veil, the standard of living for Soviet citizens had barely changed since the fall of the Tsars.  GDP was propped up by government spending, and thus became an unreliable indicator of economic growth.

The confusion between the measurement and thing I have discussed here is a perpetual problem for any sort of central planning or industrial policy.  The central planners must establish some goal, which in turn requires some measurement.  But then the project becomes all about hitting the measurement rather than promoting the goal.  Ultimately, this leads to the plan to fail in its goal even if it hits the measurements.



Source link

Tags: Measurement
ShareTweetShare
Previous Post

10 Red Flags About Klarna That Experts Warn Investors Are Ignoring

Next Post

You’ve heard that gold is hitting record highs. Not quite, BofA says

Related Posts

edit post
Merkel Blames COVID For Ukraine War

Merkel Blames COVID For Ukraine War

by TheAdviserMagazine
October 8, 2025
0

Former German Chancellor Angela Merkel was the first person to admit that the Minsk Agreement was a ploy to buy...

edit post
Coffee Break: Armed Madhouse – Drone Evolution

Coffee Break: Armed Madhouse – Drone Evolution

by TheAdviserMagazine
October 7, 2025
0

This is Naked Capitalism fundraising week. 1147 donors have already invested in our efforts to combat corruption and predatory conduct,...

edit post
WTO hikes global trade forecast for 2025; slowdown expected in 2026

WTO hikes global trade forecast for 2025; slowdown expected in 2026

by TheAdviserMagazine
October 7, 2025
0

A cargo ship sits outside of the Port of Elizabeth marine terminal seen from Bayonne, New Jersey, U.S., April 9...

edit post
Mises on Separating Morality and State

Mises on Separating Morality and State

by TheAdviserMagazine
October 7, 2025
0

A recent surge of politically-motivated violence, dramatically underscored by the shocking assassination of Charlie Kirk, has left many Americans wondering...

edit post
Letters to Frank Meyer Reveal Rothbard’s Views on Lincoln, Slavery, and Popular Sovereignty

Letters to Frank Meyer Reveal Rothbard’s Views on Lincoln, Slavery, and Popular Sovereignty

by TheAdviserMagazine
October 7, 2025
0

When Frank Meyer described Abraham Lincoln in National Review shortly after the centenary of his death as the purveyor of...

edit post
The shutdown meant no jobs report. Carlyle’s analysis shows it would have been pretty bad

The shutdown meant no jobs report. Carlyle’s analysis shows it would have been pretty bad

by TheAdviserMagazine
October 7, 2025
0

Job seekers attend the Mega JobNewsUSA South Florida Job Fair held in the Amerant Bank Arena on September 25, 2025...

Next Post
edit post
You’ve heard that gold is hitting record highs. Not quite, BofA says

You've heard that gold is hitting record highs. Not quite, BofA says

edit post
5 Car Insurers Losing a Bunch of Customers — and 5 Companies They Switch To

5 Car Insurers Losing a Bunch of Customers — and 5 Companies They Switch To

  • Trending
  • Comments
  • Latest
edit post
What Happens If a Spouse Dies Without a Will in North Carolina?

What Happens If a Spouse Dies Without a Will in North Carolina?

September 14, 2025
edit post
Does a Will Need to Be Notarized in North Carolina?

Does a Will Need to Be Notarized in North Carolina?

September 8, 2025
edit post
Pennsylvania House of Representatives Rejects Update to Child Custody Laws

Pennsylvania House of Representatives Rejects Update to Child Custody Laws

October 7, 2025
edit post
DACA recipients no longer eligible for Marketplace health insurance and subsidies

DACA recipients no longer eligible for Marketplace health insurance and subsidies

September 11, 2025
edit post
‘Quiet luxury’ is coming for the housing market, The Corcoran Group CEO says. It’s not just the Hamptons, Aspen, and Miami anymore

‘Quiet luxury’ is coming for the housing market, The Corcoran Group CEO says. It’s not just the Hamptons, Aspen, and Miami anymore

September 9, 2025
edit post
Tips to Apply for Mental Health SSDI Without Therapy

Tips to Apply for Mental Health SSDI Without Therapy

September 19, 2025
edit post
The government shutdown’s negative impact on the travel economy tops B (JETS:NYSEARCA)

The government shutdown’s negative impact on the travel economy tops $1B (JETS:NYSEARCA)

0
edit post
Inside PepsiCo’s beverage overhaul: a Gatorade reboot, the  billion Poppi buy, and a gut-health play, all under activist scrutiny

Inside PepsiCo’s beverage overhaul: a Gatorade reboot, the $2 billion Poppi buy, and a gut-health play, all under activist scrutiny

0
edit post
How the IRS Finds Out About Your Assets 

How the IRS Finds Out About Your Assets 

0
edit post
Hong Kong’s IPO Boom: Gateway or Risk Trap for Investors?

Hong Kong’s IPO Boom: Gateway or Risk Trap for Investors?

0
edit post
The Big One Bath Towels and 6-Pack Washcloths only .99 shipped!

The Big One Bath Towels and 6-Pack Washcloths only $2.99 shipped!

0
edit post
Amsterdam’s Endeit Capital backs Stockholm-based Eir Insurance in €20M round: Know more 

Amsterdam’s Endeit Capital backs Stockholm-based Eir Insurance in €20M round: Know more 

0
edit post
The government shutdown’s negative impact on the travel economy tops B (JETS:NYSEARCA)

The government shutdown’s negative impact on the travel economy tops $1B (JETS:NYSEARCA)

October 8, 2025
edit post
Inside PepsiCo’s beverage overhaul: a Gatorade reboot, the  billion Poppi buy, and a gut-health play, all under activist scrutiny

Inside PepsiCo’s beverage overhaul: a Gatorade reboot, the $2 billion Poppi buy, and a gut-health play, all under activist scrutiny

October 8, 2025
edit post
The Big One Bath Towels and 6-Pack Washcloths only .99 shipped!

The Big One Bath Towels and 6-Pack Washcloths only $2.99 shipped!

October 8, 2025
edit post
New Yorkers Gain Access to Crypto Staking as Coinbase Secures State Approval

New Yorkers Gain Access to Crypto Staking as Coinbase Secures State Approval

October 8, 2025
edit post
YZi Labs Unveils  Billion Fund for BNB Chain Projects with Up to 0K Per Team

YZi Labs Unveils $1 Billion Fund for BNB Chain Projects with Up to $500K Per Team

October 8, 2025
edit post
Hong Kong’s IPO Boom: Gateway or Risk Trap for Investors?

Hong Kong’s IPO Boom: Gateway or Risk Trap for Investors?

October 8, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • The government shutdown’s negative impact on the travel economy tops $1B (JETS:NYSEARCA)
  • Inside PepsiCo’s beverage overhaul: a Gatorade reboot, the $2 billion Poppi buy, and a gut-health play, all under activist scrutiny
  • The Big One Bath Towels and 6-Pack Washcloths only $2.99 shipped!
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.