GDP Divided by families = Nonsense

households

Leaving the EU will cost each family £4300 a year. OMG shut the front door. Oh wait the detail is that they are saying by 2030 (2030!) that GDP will have fallen by 6%.

£4300 is the figure you get when you divide the predicted fall in GDP by the number of families. That’s like comparing apples and space chickens. GDP is not the sum of all households’ income, well I’m pretty sure it is not that simple.

But staying with the hypothetical; any negative effect, if it could be measured by household income, would not be divided evenly. The figure would be the average obviously. So if you think your household income is above the average (what’s the average these days? Say about 40-50K) then you will lose more than 4300. If you recon you are below average income you would lose less. It is probably not a straight 6% of your income but it definitely would not be a flat 4300 out of everyone’s pocket. If this last point is sounding weak to you, I think you’re right, it’s the sort of nonsense that follows when you premise on GDP/families.

Most importantly; 2030 is so far away with so many unknowns the error margin for each of which is multiplied together. How do they know how many families there will be in 2030? What will the inflation rate be for each of those years? …. Another clue is the preciseness of the figure £4300. If they had said something more plausible like “between 3000 and 4000” I might not have looked so hard at this. But there is no way anyone can seriously make such a long range prediction to the nearest hundred pounds. How much will you spend on booze in the year 2030 to the nearest 100 quid?

So I think I would be foolish to put any weight on this at all. If by 2030 our GDP has dropped by 6% it will be a surprising coincidence that’s all.

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