Author Topic: Britain, Italy include drugs and sex in GDP  (Read 199 times)

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Offline EC

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Britain, Italy include drugs and sex in GDP
« on: May 29, 2014, 05:08:24 PM »
Plenty of money is spent on illegal drugs and prostitution. The United Kingdom and Italy are now calculating how much.

The U.K.'s Office of National Statistics announced Thursday that paying for drugs and sex adds about £10 billion ($16.7 billion) a year to the economy. The British government is now including prostitution and narcotics sales in its official Gross Domestic Product (GDP) statistic. That's the oft-cited measure of how much a country's economy grows or contracts.

Overall, illegal activities are still a small part of the U.K. economy -- a mere 0.7%, according to government estimates.

The reason for the change is to harmonize economic reporting across the European Union. Prostitution and some drugs are legal in the Netherlands, and the Dutch count those activities in official government statistics.

Since prostitution and many narcotics are still illegal in the United Kingdom, the government is using a combination of police seizures and other data to estimate how much money these activities are adding to the economy.

Via CNN. More at link.

Why not? It is a valid economic activity.
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Offline Oceander

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Re: Britain, Italy include drugs and sex in GDP
« Reply #1 on: May 29, 2014, 05:20:57 PM »
That's not such a bad idea as it might seem at first.  If GDP is supposed to measure economic activity with some (perhaps minor) degree of accuracy, then all economic activity should be factored in, including illegal economic activity.  The problem, of course, is that, being illegal, it can be very difficult to properly estimate the amount of illegal economic activity to take into GDP.

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