Meet the new GDP prototype that tracks inequality

Article by Greg Rosalsky: “…Nearly a century after Kuznets pioneered the use of GDP, economists Thomas Blanchet, Emmanuel Saez, and Gabriel Zucman are trying to revolutionize it. In a new paper titled “Real-Time Inequality,” the economists imagine a new kind of GDP, one that isn’t merely a single number telling us about total economic growth, but a collection of numbers telling us where the gains from this growth are flowing. They already have a working prototype that they’ve published online, and it can provide some important insights about our economy right now…

Gabriel Zucman is an economist at UC Berkeley and the director of the James M. and Cathleen D. Stone Center on Wealth and Income Inequality. He has been working to transform government economic statistics — also called “national accounts” — for almost a decade. He says the national accounts offer the public valuable insights about economic growth. However, Zucman says, “The big problem is these data do not tell you who is benefiting from economic growth.”

America, of course, already has tons of data on inequality. The problem, Zucman says, is it usually takes a year or two for this data to be updated. “It’s not enough to come in two years after the policy battle, and say, ‘Look, this is what happened to inequality,'” Zucman says. “That’s too late.”

Their new project is an effort to fix this. Cobbling together data from a variety of official sources, Zucman and his colleagues have pioneered a method to compute in a more timely fashion how different income groups — like the working class and the middle class — are doing economically. They hope this prototype will inspire the federal government to follow suit and soon “produce numbers about how income is growing for each social group at the exact time when the Bureau of Economic Analysis releases its official GDP growth numbers.”

Zucman envisions a future where this data could inform and shape policy decisions. When considering policies like sending stimulus checks or providing tax relief, Zucman says, policymakers and voters need to know things like “which groups need more support, or whether the government may be actually overshooting, which might lead to inflation.”…(More)”.