The government of France has just made what on the face of it appears to be a nonannouncement announcement: It will not include illegal drugs and prostitution in its official calculation of the country’s gross domestic product.
What made the announcement odd was that it never has included such activities, nor have most countries. Nor do most governments announce what they do not plan to do. (“The U.S. government has no intention of sending a man to Venus.”) Yet the French decision comes in the wake of significant pressure from neighboring countries and from the European Union to integrate these activities into national accounts and economic output.
That raises a host of questions: Should these activities be included, and if those are, why not others? And what exactly are we measuring—
and why?
Few numbers shape our world today more than GDP. It has become the alpha and omega of national success, used by politicians and pundits as the primary gauge of national strength and treated as a numerical proxy for greatness or the lack thereof.
Yet GDP is only a statistic, replete with the limitations of all statistics. Created as an outgrowth of national accounts that were themselves only devised in the 1930s, GDP was never an all-inclusive measure, even as it is treated as such. Multiple areas of economic life were left out, including volunteer work and domestic work.
Now Eurostat, the official statistical agency of the European Union, is leading the drive to include a host of illegal activities in national calculations of GDP, most notably prostitution and illicit drugs. The argument, as a United Nations commission laid out in 2008, is fairly simple: Prostitution and illicit drugs are significant economic activities, and if they’re not factored into economic statistics, then we’re looking at an incomplete picture—
which in turn will make it that much harder to craft smart policy. Additionally, different countries have different laws: In the Netherlands, for instance, prostitution is legal, as is marijuana.
Those commercial transactions (or at least those that are recorded and taxed) are already part of Dutch GDP. Not including them in Italy’s or Spain’s GDPs can thus make it challenging to compare national numbers.
That is why Spain, Italy, Belgium, and the U.K. have in recent months moved to include........

Questions to Discuss

1. Do you think illegal activities should be included in GDP? Why or why not?
2. Are there legal activities that you view as socially undesirable? If so, which ones?
Do you think that GDP should include these activities? Why or why not?