this post was submitted on 09 Jan 2025
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Why does rent imputing exist? (hexbear.net)
submitted 2 months ago by SummerIsTooWarm@hexbear.net to c/askchapo@hexbear.net
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I've been sick the last few days and to pass time I watched a Video from Geopolitical Economy Report, where he states that about 8 percent of the US GDP (I know that that measurement is shit, but it's still the most used one) is attributed to imputed rent from owner-occupied housing and therefor bullshit.

I tried to read up a little on the topic because I have trouble believing that such a bogus figure is included in the GDP, because it doesn't add value. Everything you do in your own home is not work that 'benefits' the economy and if you hire contractors or buy materials it's already included in the GDP. Though the reading material I found is either full of jargon or skips this question.

So now I hope that someone knowledgeable can clarify this: is this rent imputation really just padding for the GDP or does it server another purpose?

Material I used:

And footnote: It's very telling, that capitalist countries view rent as an important part of their economy agony-deep

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[–] carpoftruth@hexbear.net 7 points 2 months ago (1 children)

Building and living in a house doesn't generate value in the same way that building and running a widget factory does, but it generates value nevertheless. If a place is rented, its easier to measure the value of that activity because the transaction is mediated through the marketplace and reflected in income/expenses. Actual money changes hands, so the value of that transaction is right out in the open. If a place is owned, there's only one party so there's no transaction and so the value generated by someone having a roof over their head is not directly measurable. Imputed rent is a way to fill that information gap. Your link on wiki frames it another way - if you consider a house an asset that the owner has invested in, living in it for free is the return on that asset.

[–] SummerIsTooWarm@hexbear.net 3 points 2 months ago (1 children)

Thanks for your reply! I think that my misunderstanding comes down to the definition of value used here. In my understanding LTV does not directly see value in living in a house (but in construction+upkeep). In contrast STV could explain that someone is meeting their own demand and with that does something for the GDP.

Another thing I don't really get about rent imputing is that an over-valued housing market drives up the GDP even more, without adding anything new

[–] carpoftruth@hexbear.net 2 points 2 months ago

Another thing I don't really get about rent imputing is that an over-valued housing market drives up the GDP even more, without adding anything new

I'm definitely not an expert on this but it sounds like you get it just fine :D

[–] Sickos@hexbear.net 3 points 2 months ago

Because neoliberal governments use neoliberal economics that prove that neoliberalism is the best?

[–] merthyr1831@lemmy.ml 2 points 2 months ago (1 children)

It's an oddity but since every country on earth agrees to measure and compare GDP using this statistic then it sort of maintains credibility and utility.

In the big picture, imputed rents being part of the GDP makes it no less fictitious than it already is. removing them entirely doesn't make any difference to the value of the GDP metric either.

[–] SummerIsTooWarm@hexbear.net 1 points 2 months ago

The problem I have is that I don't see the value added. But I guess you're right. Large parts of the GDP are already made up (just look at the FIRE sector) and one more point doesn't really make it worse. The fact that the GDP is used that much is just incomprehensible to me (well, neolibs who use it to further their goals push it...).