Omitted Non market Activities
Recall that the standard accounts include primarily market activities. Much useful economic outside the market. For example, college students are in human capital. The national accounts record the tuition, but they omit the opportunity costs of earnings forgone. Studies indicate that inclusion of non market investments in education and other ‘areas would more than double the national saving rate.
You might wonder about the many activities in the underground economy, which covers a wide variety of market activities that are not reported to the government. These include activities like gambling, prostitution, drug dealing, work done by illegal immigrants, bartering of services, and smuggling. Actually,much underground activity is intentionally excluded because national output excludes illegal activities these are by social consensus “bad” and not “goods.” A swelling cocaine trade will not enter into GDP. For other, legal but unreported activities, like unreported tips, the Commerce, Department makes estimates on the basis of surveys and audits by the Internal Revenue Service.
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