Also Look at the” Labor-Price” of Light

In a now-classic study, economist William D. Nordhaus documents how long a person would have to work in order to purchase one hour of light after dark.

His study begins with “open fire/wood, Neolithic lamp animal or vegetable fat, and Babylonian lamp/ sesame oil” (“Do Real-Input and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not,” 1997).

Rarely does any chart in any discipline show such a precipitous, 90 degree turn.

Affordable light suddenly emerged just as population began its exponential climb. No causality seems possible or logical  (people escaping the dark to conceive more children? Not likely).  But both population growth and affordability of light seem associated with something else.  It is economic growth.

Footnote: This study does not mention externalities.  If electricity to power a light bulb comes from coal, for example, then the full, real-world price of light that bulb produces includes all costs associated with environmental and health damage caused by mining and burning that coal. We are only now beginning to think in terms of such real costs.



Mayu says:

Nordhaus’s study seems to argue that because people have a greater ability to purchase electricity with increase in GNP, economic growth thus increases our standard of living.
However, this seems a preliminary and premature examination because, as you pointed out, the price of electricity Nordhaus uses does not take into account costs associated with the production and use of electricity.
So is his conclusion on the growing standard of living accompanying GNP growth overstated?

joel swerdlow says:

The chart, while demonstrating a dramatic change in human life (imagine living in the dark every day when the sun goes down), obviously captures only a piece of reality. Nordhaus himself is doing some of today’s best work on the economics of “social costs,” including global climate change.


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