Should GNP Include Housewives and Resources?
HOUSEWIVES don't count! At least not in the national-income accounts. Because they are not paid in money, all the cooking, cleaning, and child-care hours of housewives (or, for that matter, house husbands) don't add one dime to the nation's gross national product (GNP).Skip to next paragraph
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If a working couple hires a maid service to help out in the home or pays for child care, the charges are added to the national output of goods and services. But the same activities, done unpaid at home, are ignored by the statisticians in Washington.
The value of these activities is not questioned from a social standpoint. But they are considered too hard to measure accurately in dollars and cents. For example, could you determine by how much the multiplication of two-job families has reduced the time spent on household chores and child care? Should you subtract that amount from GNP?
Robert Repetto has a different complaint about national income accounts. He says they fail to encompass the concept of sustainability.
``A country could exhaust its mineral resources, cut down its forests, erode its soils, pollute its aquifers, and hunt its wildlife and fisheries to extinction, but measured income would not be affected as these assets disappeared,'' he states in a study for the World Resources Institute in Washington.
In keeping the national books, the statisticians subtract depreciation of man-made assets, including plant and equipment, from the value of national production. They don't subtract the depletion of natural resources.
``It should be considered,'' says an official in the United Nations Statistical Office. ``We are all advocating that.''
The UN system of national accounts provides a statistical standard and model that in its basic elements is closely followed by most countries. A UN Statistical Commission is expected to recommend by 1991 that nation's turn out a ``satellite'' account, separate from the current GNP standard account, that does take into consideration the depletion (or restoration) of natural resources.
That commission is also reviewing, among other statistical controversies, the question of what to do about the unpaid production of goods and services by households.
In the US, the Bureau of Economic Analysis in the Department of Commerce plans to reevaluate its count of national output in light of what the UN commission recommends.
``We are watching closely what the UN experts are doing,'' says Carol Carson, a Bureau deputy director. She is actually one of the six ``core'' experts consulted by the UN commission.
Because such a huge proportion of the United States gross national product derives from services or industrial production, a full accounting of developments in natural resources might not make much difference in the GNP accounts. Though Americans think of their nation as being resource-rich, natural resources aren't so important to total output as in some other countries.
Further, there are offsets in the bookkeeping. Depletion of some mineral resources (say, crude oil) might be offset by new discoveries of other minerals or natural gas. Or forests being cut down in the West might be replaced by new forest growth in New England.
But in some developing countries, the failure to extend the concept of depreciation to natural resources can be important. Mr. Repetto says this lack can give ``misleading signals about the status of the economy.''
With a group of graduate students, he did a calculation for Indonesia of ``net'' domestic product (NDP) - taking account of resource depletion. The annual growth rate of NDP from 1971 to 1984 on average came to 4 percent, way down from the 7.1 percent average annual growth calculated by the usual method of national accounting.
Moreover, their study only looked at the depletion of petroleum, timber, and soil resources. It ignored many other resources.
This study implies that Indonesia's natural resources are being depleted to finance current consumption.
``Such an evaluation should flash an unmistakable warning signal to economic policymakers that they were on an unsustainable course,'' holds Repetto. ``An economic accounting system that does not generate and highlight such evaluations is deficient as a tool for analysis and policy in resource-based economies and should be amended.''