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)

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.

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