From Mark Perry at Carpe Diem, Another limitation of GDP accounting – it fails to capture improvements in economic well-being in the Information Age:
Bottom Line: Perhaps all of the discussions about GDP being below potential GDP and fretting about sub-par economic (GDP) growth are really simply a reflection of the fact that GDP is really no longer the best measure of economic performance, economic growth and economic well-being in the Information Age? Thanks to the advances in computer technologies, the Internet and smartphone apps, consumers are getting more and more services like GPS for free (or at a significantly reduced cost compared to the past) today and displacing services that used to get accounted for as market-based production (maps and road atlases). In past decades like the 1950s, maybe economic output measured by GDP was a pretty good measure of both economic performance and Americans’ economic well-being. In 2015, that may no longer be the case.
Such improvements also distort the common measurements of standards of living and the distribution of wealth.