The second week’s topic of behavioral economics, GDP, and other measures of success made me realize how shallow my general knowledge of traditional economics was. Overall, it was a great eye-opening experience and a nice, gradual entrance to the course. Both the first five chapters of the Animal Spirits and GDP readings made me think of this new idea of a collaboration of different numeric measures.
All the five factors the Animal Spirit is closely related to human emotions, natural instincts, and behavior psychology. The notion of including and deeply considering the five factors to analyze phenomenon in economics is truly intriguing. I am certain that later chapters of the book will cover the methodology to use or even manipulate the five factors in order to analyze and predict different economic situations, but I have not seen those methods yet.
GDP, Gross Domestic Product, often described as a metric to quickly measure the standard of living, which is very misleading in many sense, as it was covered in both of the readings and in the class. Then I thought of GPI, Genuine Progress Indicator, as a more credible measure of standard of living, in my mind, than GDP since it at least try to include factors such as volunteer work, education, pollution and resources. And if you saw the graph comparing GDP and GPI from the link provided last week, you probably noticed the inverse relationship between the two. Then I also remembered other measures from my undergraduate study in geography, such as Human Poverty Index (HPI), which is developed by the United Nations as an indicator of the standard of living in a country by including parameters like adult illiteracy rate, population without sustainable access to an improved water source and so on, and Multidimensional Poverty Index (MPI), which digs deeper into the details, such as child mortality rate, education level, the number of toilet and more, to measure the standard of living. So I thought that the right collaboration of such measuring tools from different aspects could depict economic situations more accurately because these ways of measuring different factors have underlying consideration and care for human psychology and basic needs, just like the five factors from the Animal Spirit. After all, there is no single right answer for most of the human matters.