Sunday, February 6, 2011
Consider if you went to the store to buy bread and five varieties were offered all at the same cost. The next time you went fifty varieties were offered but still at the same cost. The cost of living remains unchanged. Since you are unlikely to eat any more, the economy hasn't grown either. Yet you have many more choices. Most would say they are better off even though the change would not show up in the data but how much better off. What if it came with the effect that oven hot fresh bread was no longer available? Would you consider yourself better off then? How much does the fiftieth variety add to your well being? How much would it add if it became the most popular and in fact extinguished five lesser varieties? Would you be better or worse off? Most would be unaffected by most changes but a few will be so in aggregate little of significance is changed, yet the aggregate of many such changes still can be. We have no method of measuring these for the individual much less between individuals or in aggregate. Living standards can improve or diminish without appearing in the measurements.