Measuring Economic Growth Using Engels’ Law

In the second sentence of this fine paper linked to by Tyler Cowen, I saw a reference to Engel’s Law, the stylized fact that when income rises, the proportion of income spent on food falls. I, in my firm conviction that all laws should be tested, thought to examine this by using FRED.

The proportion of national income spent on food in the United States:
Screenshot (15)
So this is the implied (per capita) economic growth over this time:
Screenshot (16)
http://research.stlouisfed.org/fred2/graph/?g=1eZu

Works pretty well, I guess. Implies stronger growth in the 1980s and weaker growth after the Great Recession than usually accepted.

Author: pithom

An atheist with an interest in the history of the ancient Near East. Author of the Against Jebel al-Lawz Wordpress blog.

One thought on “Measuring Economic Growth Using Engels’ Law”

Read the Comment Policy Before Commenting.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s