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Thursday, 23 August 2007

Gross Value Added - pub speak for geeks

I was in the pub last night and was talking to two guys who studied masters economics with me at university and was amazed to find out that none of them knew what GVA was.

To the majority that won't know (which is fair enough) GVA stands for gross value added and is a measurement of economic output. Essentially it is very similar to GDP (if your interested GVA = GDP - taxes on production + subsidies on production) and is calculated by summing the value added in each stage of production minus the cost of intermediate goods in the production stage.

E.g. I buy some paint and paper for £10 and paint a picture for which sells for £20 then the GVA is £10.

Anyway moving on from the GVA thing, this discussion got me thinking about education and careers. When it comes down to it these guys (and so have I) forgotten a lot of what we were taught at university. Nevertheless we all remain employed in pretty good jobs.

It really shows in many ways that us economists are right about eduction - it is more useful as a signal to employers than it is in increasing production. Unless - like myself - you are working in the same field that you studies, most of what you learnt will go to waste. However, by the very fact that you passed your degree shows you have the ability to think at a higher level and have proof that you can achieve. The person with no degree might be better than you but without the university certificate then the employer has no proof, making the risk of employing them that much greater.

This seems like a very good argument for a) going to university / working hard at school and for b) making exam grades more widely distributed (not a fifth A* and A like GCSEs) so that employers can take full advantage of what a lot of education is about - showing them that you're better than the next guy.

Oh and yes I have shown my true geekiness by admitting to talking economics in the pub when the England Germany match is going on behind me!

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posted by Carl Malways at | 0 Comments Links to this post