Do I have a correct understanding of what a measure is?

Question

Simple question but I just to want to verify whether my understanding is correct.

The length of an object is a measure for how long an object is if I measure (quantify) the length of an object, say with a cm ruler, by knowing the value for length I know how long an object is.

Now let's apply this logic to the economics context.

Real GDP per capita is a measure for economic well-being. If I measure real GDP per capita, say with an expenditure approach, by knowing the value for real GDP per capita, I have some information about what the economic well-being in the economy is.

If say the value for unemployment rate, gives me more information about what the economic-well being in the economy is, then unemployment rate is a better measure for economic well-being than real GDP per capita.

Correct?

Any response is greatly appreciated and have a wonderful day.

Answer 1

The things mentioned in your question are not entirely correct.

First, there are various definitions of measure in science. There are at least 5 important schools of thought on this issue. Following Stanford Encyclopedia of Philosophy (2020):

• Mathematical theories of measurement view measurement as the mapping of qualitative empirical relations to relations among numbers (or other mathematical entities).
• Operationalists and conventionalists view measurement as a set of operations that shape the meaning and/or regulate the use of a quantity-term.
• Realists view measurement as the estimation of mind-independent properties and/or relations.
• Information-theoretic accounts view measurement as the gathering and interpretation of information about a system.
• Model-based accounts view measurement as the coherent assignment of values to parameters in a theoretical and/or statistical model of a process.

In empirical and applied econometrics the realist or model based accounts are popular.

1. GDP is measure of gross output. In terms of realist view you can view it as a estimation of objective level of output (which is property of economic system) or in model-based view you can see it as assignment of value to parameter from standard macro models.

   You can use GDP as a proxy for measure of well being since many aspects of human welfare such as quality of healthcare, education, material well being, quality of environment etc are highly correlated with GDP. In fact GDP has almost perfect correlation with OECD better life index, which is one of the measures that are actually trying to measure human welfare (see OECD 2012). However, GDP is not a measure of welfare per se. For example, you can use distance traveled as a proxy for calories burnt, but distance is not a measure of calories burned per se.

2. Same with unemployment. Unemployment is, unsurprisingly, a measure of unemployment. You can use it as a proxy for welfare but it is not a measurement of welfare.

If unemployment happens to capture welfare better than GDP you can say unemployment is better proxy for welfare, but you should not say it is better measure of welfare per se (unless you define welfare strictly just as being employed or having lot of goods and services, there actually isn't agreed upon definition of human welfare).

Actual measures of well being are measures such as better life index. However, as mentioned in the previous paragraph, there is no consensus of how to properly define welfare, so such measures are always at least a bit controversial.