Breaking windows, doors, and GDP

This week Mieke Welvaert discussed (Infometrics link) the broken window fallacy.

GDP measures the value produced within a geographic entity.

Even though it seems damaging property could increase GDP, this is unlikely – and when it does, it does not do so in a way that increases wellbeing.  In truth, it would be better if we didn’t have to repair what we have and could just add to it.

Although this is not possible in the case of natural disasters, it is possible when we can prevent destructive events from happening.

The moral of the story is: If it ain’t broke, don’t break it.