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12 comments on Driving the European GDP

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WebHubbleTelescope on October 22, 2005 - 10:04am

GDP is a contrived politically-driven formula given by:
GDP=private consumption + government + investment + net exports

Private consumption includes gasoline consumed via miles driven. So I can see how when you plot X on top of X + delta, you get something that lines up.

Looks as if the economist bureaucrats who devised the GDP formula weighted the factors so it came out this way.

So yes, I think you have confirmed causality, in the sense of cause and effect. The cause is private consumption, and the effect is the output of the mathematical formula for GDP. This is no different than saying Y = aX + b demonstrates causality, where you get to define the formula.

Perhaps the good that can come out of this is to remember Bush's statement:
"We need an energy policy that encourages consumption."

Bush, Snow and company might have the formula figured out. Treasury Secretary Snow lectures China on increasing their savings rate, which in theory should put a halt to their consumption. This keeps propelling our own economy, in the sense that the stock market retains confidence that we have enough fuel to go around.

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Stuart Staniford on October 22, 2005 - 2:49pm

Gasoline directly is only a few percent of private consumption. The percentage of GDP that gasoline is fluctuates a lot with gas prices, but the miles driven seems to fluctuate very little.

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WebHubbleTelescope on October 22, 2005 - 8:32pm

I bicycle commute, live a fairly frugal lifestyle, yet gasoline does play a significant part of my consumption.

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“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”

—Max Weber, 1905