Brown economists measure GDP growth from outer space

Sep 04, 2009
Increased nighttime lighting indicates economic growth in Poland and Eastern Europe between 1992 (left, above) and 2002. Poland is in the top left quarter of each image. Credit: Image and Data processing by NOAA's National Geophysical Data Center. DMSP data collected by the US Air Force Weather Agency.

Outer space offers a new perspective for measuring economic growth, according to new research by three Brown University economists. In a National Bureau of Economic Research working paper, J. Vernon Henderson, Adam Storeygard, and David N. Weil suggest a new framework for estimating a country or region's gross domestic product (GDP) by using satellite images of the area's nighttime lights.

Reliable data on is hard to come by in many parts of the world — particularly in sub-Saharan Africa and other developing countries — and the data is often not calculated at all for cities. The authors cite the Penn World Tables, one of the standard compilations of data on income, which rank countries with grades A through D by the quality of their GDP and price data. While almost all industrialized countries receive a grade of A, nearly all sub-Saharan African countries get a grade of C or D, which is interpreted as roughly 30 or 40 percent margin of error. Several countries do not appear in the table, including Iraq, Myanmar, Somalia, and Liberia.

To improve these estimates, Henderson, Storeygard, and Weil suggest combining measured income data with the changes observed in a country's "night lights" as seen from outer space. Using U.S. Air Force weather satellite picture composites, they look at changes in a region's light density over a 10-year period. "Consumption of nearly all goods in the evening requires lights," they write. "As income rises, so does light usage per person, in both consumption activities and many investment activities."

When the researchers applied the new methodology to countries with low-quality national income data, the new estimates were significantly different. For example, in the Democratic Republic of Congo, lights suggest a 2.4-percent annual growth rate in GDP, while official estimates suggest a negative 2.6-percent growth over the same time period. The Congo appears to be growing faster than official estimates suggest. At the other end, Myanmar has an official growth rate of 8.6 percent a year, but the lights data imply only a 3.4-percent annual growth rate.

Henderson, Storeygard, and Weil say they don't envision the lights density data as a replacement for official numbers, but when added to existing data from agencies like the World Bank, the lights density can provide a better indicator of how these economies really are performing.

"Our hope is that people start using this, either when they don't have actual data on economic growth ... or when the numbers are pretty bad," said Henderson, professor of economics. "This is just a way to get better estimates."

The second portion of the paper establishes the first known causal relationship between local agriculture productivity and an increase in city incomes. The authors examined 541 cities in 18 African countries over a period of nine years, using rainfall as a way to measure "productivity shocks" to the rural areas. The authors conclude that an increase in agricultural output does in fact have substantial effects on local urban economic activity.

Storeygard, a fourth-year graduate student, added that the research was a true collaboration. Weil has written widely on various aspects of economic growth, while Henderson is interested in how to measure growth at a regional or subnational level. Storeygard has experience using geographic and satellite data. "It's the kind of paper that used all three of our areas," said Storeygard. "I don't think any two of us would have been able to do this in quite the same way."

Source: Brown University (news : web)

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

add to favorites email to friend print save as pdf

Related Stories

As planet warms, poor nations face economic chill

Mar 13, 2009

(PhysOrg.com) -- A rising tide is said to lift all boats. Rising global temperatures, however, may lead to increased disparities between rich and poor countries, according to a recent MIT economic analysis of the impact of ...

Debunking the 'curse of oil'

Jul 07, 2008

A paper co-written by an Indiana University economics professor takes issue with the widespread idea that there is a "natural resource curse" that puts countries with oil or mineral wealth at a disadvantage when it comes ...

Alarming growth in expected CO2 emissions in China

Mar 10, 2008

The growth in China's carbon dioxide (CO2) emissions is far outpacing previous estimates, making the goal of stabilizing atmospheric greenhouse gases even more difficult, according to a new analysis by economists at the Uni ...

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 2

Adjust slider to filter visible comments by rank

Display comments: newest first

srikkanth_kn
1 / 5 (1) Sep 05, 2009
Are these 'night lights' seen dimmer during these economically turbulent times ?
RockyB
not rated yet Sep 06, 2009
"The Congo appears to be growing faster than official estimates suggest."

OR (just MAYBE) this method of evaluating GDP is completely and utterly useless!

More news stories

Study finds law dramatically curbing need for speed

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...