In measuring human welfare there are some things that money doesn't measure directly. The vision of a sunset, the exuberance of playing a sport, the delight of watching your children grow up are some positive examples; some negative ones being the death of a family member, separation from your life partner, despoilation of much loved countryside.
Aspects of these can be captured by a money measure, but not their total effect. Economists sometimes seek to value aspects of intangibles by asking 'how much would you be prepared to pay to keep the positive or avoid the negative'. Such valuation methods are reflected in some series, but are problematic. From the viewpoint of cross national comparisons the problem is great - just how do statisticians from different countries deal with such intangible matters?
TangiblesEven on tangible matters, there are problems for instance - what is included in any measure? In the following research activity you are required to find out answers to the following questions before comparing your answers to ours.
- Does gross national product include the output of self sufficient farmers producing for themselves and their neighbours?
- Is the allowance based on common inter-country definitions and measures?
- Is housework included in a money measure of economic activity?
- Are voluntary activities measured on a money base – where do we count the effort made by a volunteer school governor?
- Are activities regarded as 'outside' of official markets (informal) or immoral or criminal included in money measures?
Statisticians and economists sometimes deal with such problems by estimating the activities and their money value by association with other more immediately measurable variables or by hedonic methods.
Nevertheless, money is still used as the most frequently occurring standard of account.
