Are Subtractions Necessary, Too? (I)

If we were able to adjust for the items mentioned in the previous section, we might agree that we have a solid measure of real GDP. Nevertheless, we might also feel that we should make some adjustments to real GDP to get a more accurate notion of the level of our material standard of living.
For example, the government statisticians treat as equivalent the $5 you spend on gasoline to go on a date in the evening and the $5 you spend on gasoline for your trip to work in the morning. Clearly, however, most people would not think about these two expenditures in the same way. The next category of items we might focus on is sometimes referred to as “regrettable necessities.”
This includes diplomacy, national security, police and fire protection, and prison facilities. These items typically don’t yield consumer satisfaction in and of themselves. They are produced because they make it possible for us to enjoy the consumption of other goods. In this sense, we can think about regrettable necessities as intermediate goods that go into the production of other goods.