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This claims that real gdp does not account for changing preferences.

However, if preferences were to change for sneakers and subsequently pushes the price up, won't this be reflected in the changed price of a basket of goods?

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  • $\begingroup$ I am not sure what accounting for changing preferences means but in your example, if preference for sneakers increased it's share in consumption in the real GDP would also go up. $\endgroup$
    – Dayne
    Nov 23 '20 at 2:17
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I think the confusion here may be about the phrases "control for" and "account for".

Real GDP "controls for" prices, meaning that if prices change (say every price doubles), then real GDP shouldn't change either.

In contrast, real GDP does not "control for" preferences, because if preferences change, then real GDP will also change.


The phrase "account for" is ambiguous and could mean either "control for" (as described above) or "is affected by" (pretty much the exact opposite meaning).

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