Are We Measuring What Matters?

Do traditional economic measures work in a knowledge economy? This Business Week article argues that they do not. In fact, many knowledge building investments are simply not measured. For example, in the olden days companies spent a lot of money to train people. (You had to fly people to a training facility, hire instructors, pay overhead, etc.) Now you can take classes online. "At IBM, the training budget fell by $10 million from 2003 to 2004, a 1.4% decline, while the number of classroom and e-learning hours rose by 29%." As it stands, traditional economic measures fail to capture these types of productivity improvements. Another interesting calculation -- the ROI of immigration. If immigrants come to the US already educated, they are adding to the economic value of the nation. "Most of the workers who immigrate to the U.S. each year have at least a high school diploma, while about a third have a college education or better. Since it costs, on average, roughly $100,000 to provide 12 years of elementary and secondary education, and another $100,000 to pay for a college degree, immigrants are providing a subsidy of at least $50 billion annually to the U.S. economy in free human capital. Alternatively, valuing their contribution to the economy by the total wages they expect to earn during their lifetime would put the value of the human capital of new immigrants closer to $200 billion per year." Read more...