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GROSS NATIONAL PRODUCT: The total market value of all goods and services produced by the citizens of an economy during a given period of time, usually one year. Gross national product, often abbreviated simply as GNP, was once the federal government's official measure of how much output our economy produces. In the early 1990s, however, it was replaced by gross domestic product (GDP).
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                           STATISTICAL DISCREPANCY: The official adjustment factor in the National Income and Product Accounts that ensures equality between the income and expenditures approaches to measuring gross domestic product. This is one of several differences between national income (the resource cost of production) and gross (and net) domestic product (the market value of production). It is also the key difference between gross domestic income and gross domestic product. This statistical discrepancy tends to be relatively small, usually less than 1 percent of gross domestic product. The statistical discrepancy is the official "fudge factor" that ensures perfect equality between gross domestic product and gross domestic income in the National Income and Product Accounts. While the statistical discrepancy is officially "added" to gross domestic income when calculating gross domestic product, the actual value can be positive or negative. The value of the statistical discrepancy is whatever it needs to be to equate the income and expenditure approaches to measuring gross domestic product.In principle, gross domestic product measured from the expenditure side SHOULD be exactly equal to gross domestic product measured from the income side (that is, gross domestic income). In reality, these two approaches to measuring gross domestic product do not yield identical results. They should, but they do not. This statistical discrepancy is thus used to ensure that everything balances, that there is perfect equality between gross domestic product measured from either approach. The reason that these two approaches do not add up exactly is that the economy is extremely complex and measurements are not perfect. The economy has over a hundred million workers employed by hundreds of thousands of firms, producing trillions of dollars worth of every conceivable good or service imaginable. Even though the U.S. economy has the best data collection system in the history of humanity, it is not perfect. Errors are made. Production and income are missed or double counted. To appreciate the enormous task facing the data-crunchers at the Bureau of Economic Analysis, try counting the number of people meandering about a shopping mall on any given Saturday afternoon, preferably right before Christmas. And do it in two different ways. First, count heads. Second, count fingers, then divide by ten. In principle, both numbers SHOULD be the same. In reality, a few feet are likely missed and/or a few heads are bound to be double counted. It happens. The world is not perfect.
Recommended Citation:STATISTICAL DISCREPANCY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: March 24, 2023].
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