Fool's Growth is a problem in macro-economical econometric models based on GDP when these assume economic growth (measured in marked trade prices) while the output value to citizens drop.
Contents
This problem introduces a substantial error in political choice theory and can easily lead to failures by assumption as some good is taken for granted while ignoring the costs elsewhere. The essential problem is that the commercial profit is measured and included in the concept of growth whereas the value to the end-consumer is not - therefore these models are biased towards policies that favor commercial profit over creating overall value.
The consequences of a Fool's Growth mistake are policies that for instance promote anti-competitive (e.g. monopolies), lock-in (e.g. bad standards that prevent innovation) or value-destructive political investments.
Related to
The Fool's Growth problem is closely related to the concept of Citizen Profit covering the value of value chains to individual citizens over and above the cost to the citizen.
Origin
The term Citizen Profit was first suggested and introduced by the Danish innovation strategist & security specialist, Stephan J. Engberg