Week3Summary

Week3Summary - Week 3 Summary The claim: no systematic gain...

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Week 3 Summary The claim: no systematic gain in living standards between the average ancient society and the average society as of 1800. Implication-> Per capita living standards around the world were not dramatically different prior to industrialization. Prior to industrialization, many Europeans were no better off than residents of other societies in earlier times, eg. the Roman Empire. Intuition: Investments in technology increased short run living standards, but in the long term merely increased population, so that technology never outpaced population increases, and per capita living standards were more or less constant, with almost no net growth. What types of evidence can we use to examine this claim? 1- Height—comparisons across different populations. Height is mostly nutrition, not genetics. No trend in heights before 1800. Differences in height across populations at different points in time. 2- Life expectancy 3- Leisure time or hours of work 4- Labor productivity: number of kilocalories per hour of labor when producing their major food staples. Or output per worker. Example used in class: If we were to look at the price of bicycles in 1900, for instance, we would find that it would have taken people at average going wages, over 250 hours to earn enough money to purchase a basic bike. At real prices today, it would take a person far fewer hours— let’s say two day’s worth of wages ($150), rather than 30 days. If we were to measure wealth in units of how many bicycles you can buy, you would be about 15 times wealthier today than in 1900. Remember: In comparing relative wealth across time, much depends on which set of commodities you view as central and important. This is the Index-number problem. For the pre-industrial period, food, drink, and housing are probably the most important goods, (rather than vacuum cleaners, TV’s, automobiles, and hundreds of everyday goods we are used to today). Also, the speed of diffusion of pre-industrial technologies tended to be very slow. 5- Expenditure shares.
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This note was uploaded on 10/02/2008 for the course ECON 4514 taught by Professor Shuie during the Fall '08 term at Colorado.

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Week3Summary - Week 3 Summary The claim: no systematic gain...

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