I think the biggest danger to that reasoning is the premise that they are caused by GDP, and only by gdp, which I quite flatly dispute.
Well, this seems like something that is actually worth finding out. Because if it is the case that GDP (/ GDP per capita) does have a significant causal influence on one (or more) of them, then you are conditioning on a mediator, (partially) hiding the causal effect of GDP on the outcome. It seems to me like your model assumes that GDP does not have any casual influence on any of these variables, which seems like a pretty strong assumption. Unless I am misunderstanding something.
(ETA: Similarly, if both GDP and life satisfaction causally influence one of the variables, you are conditioning on a collider. That could introduce a spurious negative correlation masking a real correlation between GDP and life satisfaction, via Berkson’s paradox. For example, suppose both life satisfaction and GDP cause social stability. Then, when you stratify by social stability, it would not be surprising to find a spurious negative correlation between GDP and life satisfaction, because a high-social-stability country, if it happens to have relatively low GDP, must have very high life satisfaction in order to achieve high social stability, and vice versa.)
Any attempt of a defense of GDP, specifically, needs to take into the account the fact that it’s just a deeply flawed measure of value. That’s why econ nobelists have been arguing against it for over a decade (and likely much longer, given that whole international reports were being published on it in 2012). So even if it *were *more predictive than the model suggests, that still wouldn’t address the fact it’s known to be misleading, all on its own, and not something I would spend a lot of time defending on the merits.
My understanding of these critiques is that they say either that (1) GDP is not intrinsically valuable, (2) GDP does not measure perfectly anything that we care about, or fails to measure many things that we care about, and/or (3) GDP focuses too narrowly on quantifiable economical transactions.
But if you were to find empirically that GDP causes something we do care about, e.g., life satisfaction, then I don’t understand how those critiques would be relevant? (1) would not be relevant because we don’t care about increasing GDP for its own sake, only in order to increase life satisfaction. (2) would not be relevant because whatever GDP would or would not succeed in measuring, it does measure something, and it would be desirable to increase whatever it measures (since whatever that is, causes life satisfaction). (3) would not be relevant because whatever does or does not go into the measure, again, it does measure something, and it would be desirable to increase whatever it measures.
But perhaps the most definitive argument against the unique value of gdp is in simple counterexamples. Between 2005 and 2022, Costa Rica had a higher life satisfaction than the United States, with less than a third of the GDPpc. This simply wouldn’t be possible, if gdp just bought you happiness. Ergo, that simply cannot be the answer.
Your reductio shows that GDP cannot be the only thing that has a causal influence on life satisfaction (assuming measurements are good, etc.). But I don’t think OP or anyone else in this comment section is saying that GDP/wealth/money is the only thing that influences life satisfaction, only at most that it is one thing that has a comparatively strong influence on it. And your counterexample does not disprove that.
Hi Erich, sorry for the delay, and thank you for the very careful response. In
order:
Wrt: “… It seems to me like your model assumes that GDP does not have any casual influence on any of these variables,…”
I don’t actually make any such assumption about GDP, and in fact am completely agnostic (for now) about causal dependencies within the graph. I only make the tentative assumption that every variable listed has some causal effect, direct or indirect, on national satisfaction (ergo, it’s not *all* GDP, which is what you accurately quote me as disputing), based on 1) a thorough search being more likely to exclude spurious causes, and 2) expert knowledge. Water, Shelter, Freedom, Friends, Being Accepted — most of these seem pretty unimpeachable. Beyond that I’m actually trying to be especially cautious about proposing particular dependencies because based on my experience with causal systems of even moderate size, the pattern of influences is likely to be spectacularly complicated, and unintuitive. This has certainly been borne out by all of my early explorations with causal discovery tools.
(As an aside, I am very interested in these questions, and continuing to work on them, but my first goal is simply to start with the right set of variables. I think progress on this itself could be a huge improvement over what I currently understand to be the globally accepted standard.)
Wrt “But if you were to find empirically that GDP causes something we do care about, …”
That feels like a reasonably fair description of the arguments with which I’m familiar, but I think there are at least two important nuances. The most simple is that GDP can have not just limited utility, but also horrific externalities — most obvious among them, global warming. It’s essentially your point (2), but with the emphasis that what’s left out can actually be more powerful, and worse, than what’s left in. In other words, even if GDP can cause satisfaction *in the short term,* satisfaction itself actually leaves out the very important question of the future. That’s an inherent shortcoming of the model, but an important strike against the concept. I go into this more in the paper.
The other is that I see “GDP” as practically too vague to be applicable for intervention. You might estimate a causal effect for “GDP,” but that might only be because *one* of the thousand things within the concept actually makes a difference. Then when you go to intervene on a different one of the thousand things, because you identify it is part of “GDP,” you just don’t get the same effect — essentially, because your variables weren’t precisely defined enough. So I’m happy to talk about how economic processes might play critical roles, but I don’t feel comfortable talking about “water” and “the entire economy” as if they have equivalent structural validity. At a minimum, one of them is much more vulnerable to bad accounting practices.
Wrt “But I don’t think OP or anyone else in this comment section is saying that GDP/wealth/money is the only thing that influences life satisfaction,…”
I do agree with you, and agree I misread A. de Vries position. Though, while I don’t think anyone has said explicitly that they think GDP is the *only* cause of satisfaction, there have also been almost no explicit proposals of anything that *does* cause satisfaction, *apart* from GDP — so I may have been reading too much between the lines there, but my trying to get some distance from the concept is really driven by a confusion that it’s the only variable we’re talking about. Still, I could have expressed that more cogently.
Well, this seems like something that is actually worth finding out. Because if it is the case that GDP (/ GDP per capita) does have a significant causal influence on one (or more) of them, then you are conditioning on a mediator, (partially) hiding the causal effect of GDP on the outcome. It seems to me like your model assumes that GDP does not have any casual influence on any of these variables, which seems like a pretty strong assumption. Unless I am misunderstanding something.
(ETA: Similarly, if both GDP and life satisfaction causally influence one of the variables, you are conditioning on a collider. That could introduce a spurious negative correlation masking a real correlation between GDP and life satisfaction, via Berkson’s paradox. For example, suppose both life satisfaction and GDP cause social stability. Then, when you stratify by social stability, it would not be surprising to find a spurious negative correlation between GDP and life satisfaction, because a high-social-stability country, if it happens to have relatively low GDP, must have very high life satisfaction in order to achieve high social stability, and vice versa.)
My understanding of these critiques is that they say either that (1) GDP is not intrinsically valuable, (2) GDP does not measure perfectly anything that we care about, or fails to measure many things that we care about, and/or (3) GDP focuses too narrowly on quantifiable economical transactions.
But if you were to find empirically that GDP causes something we do care about, e.g., life satisfaction, then I don’t understand how those critiques would be relevant? (1) would not be relevant because we don’t care about increasing GDP for its own sake, only in order to increase life satisfaction. (2) would not be relevant because whatever GDP would or would not succeed in measuring, it does measure something, and it would be desirable to increase whatever it measures (since whatever that is, causes life satisfaction). (3) would not be relevant because whatever does or does not go into the measure, again, it does measure something, and it would be desirable to increase whatever it measures.
Your reductio shows that GDP cannot be the only thing that has a causal influence on life satisfaction (assuming measurements are good, etc.). But I don’t think OP or anyone else in this comment section is saying that GDP/wealth/money is the only thing that influences life satisfaction, only at most that it is one thing that has a comparatively strong influence on it. And your counterexample does not disprove that.
Hi Erich, sorry for the delay, and thank you for the very careful response. In
order:
Wrt: “… It seems to me like your model assumes that GDP does not have any casual influence on any of these variables,…”
I don’t actually make any such assumption about GDP, and in fact am completely agnostic (for now) about causal dependencies within the graph. I only make the tentative assumption that every variable listed has some causal effect, direct or indirect, on national satisfaction (ergo, it’s not *all* GDP, which is what you accurately quote me as disputing), based on 1) a thorough search being more likely to exclude spurious causes, and 2) expert knowledge. Water, Shelter, Freedom, Friends, Being Accepted — most of these seem pretty unimpeachable. Beyond that I’m actually trying to be especially cautious about proposing particular dependencies because based on my experience with causal systems of even moderate size, the pattern of influences is likely to be spectacularly complicated, and unintuitive. This has certainly been borne out by all of my early explorations with causal discovery tools.
(As an aside, I am very interested in these questions, and continuing to work on them, but my first goal is simply to start with the right set of variables. I think progress on this itself could be a huge improvement over what I currently understand to be the globally accepted standard.)
Wrt “But if you were to find empirically that GDP causes something we do care about, …”
That feels like a reasonably fair description of the arguments with which I’m familiar, but I think there are at least two important nuances. The most simple is that GDP can have not just limited utility, but also horrific externalities — most obvious among them, global warming. It’s essentially your point (2), but with the emphasis that what’s left out can actually be more powerful, and worse, than what’s left in. In other words, even if GDP can cause satisfaction *in the short term,* satisfaction itself actually leaves out the very important question of the future. That’s an inherent shortcoming of the model, but an important strike against the concept. I go into this more in the paper.
The other is that I see “GDP” as practically too vague to be applicable for intervention. You might estimate a causal effect for “GDP,” but that might only be because *one* of the thousand things within the concept actually makes a difference. Then when you go to intervene on a different one of the thousand things, because you identify it is part of “GDP,” you just don’t get the same effect — essentially, because your variables weren’t precisely defined enough. So I’m happy to talk about how economic processes might play critical roles, but I don’t feel comfortable talking about “water” and “the entire economy” as if they have equivalent structural validity. At a minimum, one of them is much more vulnerable to bad accounting practices.
Wrt “But I don’t think OP or anyone else in this comment section is saying that GDP/wealth/money is the only thing that influences life satisfaction,…”
I do agree with you, and agree I misread A. de Vries position. Though, while I don’t think anyone has said explicitly that they think GDP is the *only* cause of satisfaction, there have also been almost no explicit proposals of anything that *does* cause satisfaction, *apart* from GDP — so I may have been reading too much between the lines there, but my trying to get some distance from the concept is really driven by a confusion that it’s the only variable we’re talking about. Still, I could have expressed that more cogently.