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GDP is a very weird metric. For example, GDP includes money spent for renting an apartment, although no goods are produced in this case.

So for example, if there is a village with two people, and they rent each other's home then this village has non-zero GDP, although no goods or services are produced.

Inflated education, medical or insurance prices also inflate GDP. So a teacher in one country could produce 2x more GDP per unit time as the same teacher in another country.

Another wrong thing to do is to adjust income or GDP for food prices (purchasing power parity). This is absolutely wrong. The idea of PPP is that if in your country potato is two times cheaper then it makes you two times richer. This is wrong because a MacBook or a car are not two times cheaper. Actually they are more expensive than in the West. And if you go abroad then there will be no cheap potato either. So PPP is a total lie. It can be applied only to poorest people who spend all of their income on potato.

So if you want to adjust the income for PPP, at least use MacBook or car prices instead of potato.

I think that a fair metric would be a percentile distribution of how much money a person has left after renting the cheapest apartment and buying the cheapest food.



PPP isn't based on "a potato", it's typically calculated based on a representative price index covering all the different types of goods people buy.

Theoretically it would be possible to create a price index based on Macbooks or cars, but since most people in the world buy more food than Macbooks or cars this would obviously be misleading. When people living in developed countries move to a developing country they don't think "wow, the cost of living is high, the Macbook has a luxury tax on it" they think "wow, most things are incredibly cheap here". It is impossible to come up with a perfect PPP because people spend their money on different things, but it's a lot better than thinking a country which has inflated prices for everything is much more materially wealthy than one which has low prices for everything.

And the whole point of PPP adjustments is to get rid of the scenario where the same education contributes much more to GDP in a nation where wages and school buildings are expensive than one where they're not.


>For example, GDP includes money spent for renting an apartment, although no goods are produced in this case.

Because it measures all the goods and services produced in a country over the course of an year.

I know of a way to inflate it as much you want, but I don't think I will ever be in a position to use it.




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