Tim Harford

[Y]ou will often hear so-called experts complaining that taxes on driving or on pollution would be bad for the economy. That sounds worrying. But what is ‘the economy’? If you spend enough time watching Bloomberg television or reading the Wall Street Journal you may come to the mistaken impression that ‘the economy’ is a bunch of rather dull statistics with names like GDP (gross domestic product). GDP measures the total cost of producing everything in the economy in one year—for instance, one extra cappuccino would add £1.85 to GDP, or a little less if some of the ingredients were imported. And if you think this is ‘the economy’, then the experts may be right. A pollution tax might well make a number like GDP smaller. But who cares? Certainly not economists. We know that GDP measures lots of things that are harmful (sales of weapons, shoddy building work with subsequent expensive repairs, expenditures on commuting) and misses lots of things that are important, such as looking after your children or going for a walk in the mountains.

Most economics has very little to do with GDP. Economics is about who gets what and why.

Tim Harford, The Undercover Economist, London, 2006, p. 109