Misery index (economics)

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Misery Index
  Misery Index
  Unemployment rate
  Inflation rate CPI

The misery index is an economic indicator, created by economist Arthur Okun. The index helps determining how the average citizen is doing economically and it is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country.[1]

Misery index by US presidential administration[edit]

Index = Unemployment rate + Inflation rate (lower number is better)
President Time Period Average Low High Start End Change
Harry Truman 1948–1952 7.88 03.45 – Dec 1952 13.63 – Jan 1948 13.63 3.45 -10.18
Dwight D. Eisenhower 1953–1960 9.26 02.97 – Jul 1953 10.98 – Apr 1958 3.28 9.96 +5.68
John F. Kennedy 1961–1963 7.14 06.40 – Jul 1962 08.38 – Jul 1961 8.31 6.82 -1.49
Lyndon B. Johnson 1963–1968 6.77 05.70 – Nov 1965 08.19 – Jul 1968 7.02 8.12 +1.10
Richard Nixon 1969–1974 10.57 07.80 – Jan 1969 17.01 – Jul 1974 7.80 17.01 +9.21
Gerald Ford 1974–1976 16.00 12.66 – Dec 1976 19.90 – Jan 1975 16.36 12.66 -3.70
Jimmy Carter 1977–1980 16.26 12.60 – Apr 1978 21.98 – Jun 1980 12.72 19.72 +7.00
Ronald Reagan 1981–1988 12.19 07.70 – Dec 1986 19.33 – Jan 1981 19.33 9.72 -9.61
George H. W. Bush 1989–1992 10.68 09.64 – Sep 1989 14.47 – Nov 1990 10.07 10.30 +0.23
Bill Clinton 1993–2000 7.80 05.74 – Apr 1998 10.56 – Jan 1993 10.56 7.29 -3.27
George W. Bush 2001–2008 8.11 05.71 – Oct 2006 11.47 – Aug 2008 7.93 7.39 -0.54
Barack Obama 2009–2016 8.83 05.06 – Sep 2015
12.87 – Sep 2011 7.83 6.77 -1.06
Donald Trump 2017–2020 6.91 05.21 – Sep 2019
15.03 – Apr 2020 7.30 8.06 +0.76
Joe Biden 2021–2021 9.77 07.70 – Jan 2021
11.29 – Jun 2021 7.70 10.19 +2.49

[2]

Variations[edit]

Harvard Economist Robert Barro created what he dubbed the "Barro Misery Index" (BMI), in 1999.[3] The BMI takes the sum of the inflation and unemployment rates, and adds to that the interest rate, plus (minus) the shortfall (surplus) between the actual and trend rate of GDP growth.

In the late 2000s, Johns Hopkins economist Steve Hanke built upon Barro's misery index and began applying it to countries beyond the United States. His modified misery index is the sum of the interest, inflation, and unemployment rates, minus the year-over-year percent change in per-capita GDP growth.[4]

Hanke has recently constructed a World Table of Misery Index Scores by exclusively relying on data reported by the Economist Intelligence Unit.[5] This table includes a list of 89 countries, ranked from worst to best, with data as of December 31, 2013 (see table below).

World Table of Misery Index Scores as of December 31, 2013.

Political economists Jonathan Nitzan and Shimshon Bichler found a negative correlation between a similar "stagflation index" and corporate amalgamation (i.e. mergers and acquisitions) in the United States since the 1930s. In their theory, stagflation is a form of political economic sabotage employed by corporations to achieve differential accumulation, in this case as an alternative to amalgamation when merger and acquisition opportunities have run out.[6]

Hanke's 2020 Misery Index[edit]

Ranked from worst to best[7]
Rank Country Misery
Index
1  Venezuela 3827.6
2  Zimbabwe 547.0
3  Sudan 193.9
4  Lebanon 177.1
5  Suriname 145.3
6  Libya 105.7
7  Argentina 95.0
9  Angola 60.6
10  Madagascar 60.4
11  Brazil 53.4
12  South Africa 49.3
13  Haiti 48.9
14  Kyrgyzstan 47.1
15  Nigeria 45.6
16  Eswatini 42.7
17  Lesotho 42.4
18  Peru 42.2
19  Zambia 41.6
20  South Sudan 41.2
21  Turkey 41.2
22  Namibia 40.7
23  Gabon 40.5
24  Congo 40.3
25  Botswana 39.7
26  Iraq 39.5
27  São Tomé and Príncipe 39.3
28  Liberia 39.1
29  Jamaica 38.6
30  Malawi 37.9
31  Jordan 37.9
32  Guinea 36.8
33  Uruguay 36.7
34  Armenia 36.7
35  Montenegro 36.2
36  Tunisia 36.1
37  Ethiopia 36.1
38  Honduras 35.8
39  India 35.8
40  Panama 35.7
41  Colombia 35.4
42  Mongolia 35.4
43  Georgia 34.8
44  Uzbekistan 34.1
45  Dominican Republic 34.0
46  Ukraine 33.5
47  Saudi Arabia 33.1
48  Algeria 32.7
49  Pakistan 32.5
50  Costa Rica 32.4
51  Paraguay 32.0
52  Trinidad and Tobago 31.5
53  Greece 31.3
54  Mauritius 30.4
55  Gambia 30.2
56  Cape Verde 29.9
57  Bolivia 29.9
58  Kazakhstan 29.5
59  Guatemala 29.3
60  Burundi 28.7
61  Philippines 28.3
62  Azerbaijan 28.2
63  Spain 28.2
64  North Macedonia 28.1
65  Belize 27.8
66  Democratic Republic of the Congo 27.4
67  Equatorial Guinea 27.1
68  Comoros 26.2
69  Myanmar 26.2
70  El Salvador 26.0
71  Mozambique 25.8
72  Nicaragua 25.7
73  Mexico 25.6
74  Sri Lanka 24.3
75  Chile 23.9
76  Albania 23.8
77  Bosnia and Herzegovina 23.8
78  Iceland 23.5
79  Ecuador 23.3
80  Fiji 23.2
81  Mauritania 23.2
82  Morocco 22.8
83  New Zealand 22.2
84  Belarus 22.0
85  Italy 22.0
86  Oman 21.6
87  United Kingdom 22.5
88  Egypt 20.9
89  Indonesia 20.9
90  Kenya 20.8
91  Vanuatu 20.4
92.  Kuwait 20.3
93  Papua New Guinea 20.1
94  Russia 19.9
95    Nepal 19.9
96  Romania 18.5
97  Serbia 18.4
98  France 18.4
99  Croatia 18.3
100  Hong Kong 18.2
101  Canada 18.1
102  Malta 18.0
103  Portugal 18.0
104  Uganda 17.6
105  Mali 17.5
106  Estonia 17.1
107  Latvia 17.1
108  Slovenia 17.0
109  United States 16.7
110  Moldova 16.4
111  Cyprus 16.3
112  Slovakia 16.2
113  Bulgaria 16.0
114  Laos 16.0
115  Australia 15.9
116  Burkina Faso 15.9
117  Cuba 15.8
118  Czech Republic 15.7
119  Cameroon 15.5
120  Belgium 15.4
121  Hungary 14.8
122  Singapore 14.6
123  Austria 14.5
124  Lithuania 14.5
125  Malaysia 14.5
126  Guinea-Bissau 14.4
127  Israel 14.4
128  Luxembourg 14.3
129  Bangladesh 14.0
130  Poland 13.9
131  Vietnam 13.4
132  Bahrain 13.2
133  Central African Republic 13.2
134  Netherlands 13.0
135  Ireland 12.9
136  Finland 12.8
137  Norway 12.8
138  Sweden 12.7
139  Thailand 12.6
140  Denmark 11.8
141  United Arab Emirates 11.8
142  Tanzania 11.6
143  Chad 11.6
144  Tonga 11.4
145  Germany 10.9
146  Côte d'Ivoire 10.8
147  Rwanda 10.6
148  Niger 10.5
149  Togo 9.5
150  Switzerland 8.6
151  South Korea 8.3
152  China 8.3
153  Japan 8.1
154  Qatar 5.3
155  Taiwan 3.8
156  Guyana −3.3

Criticism[edit]

A 2001 paper looking at large-scale surveys in Europe and the United States concluded that unemployment more heavily influences unhappiness than inflation. This implies that the basic misery index underweights the unhappiness attributable to the unemployment rate: "the estimates suggest that people would trade off a 1-percentage-point increase in the employment rate for a 1.7-percentage-point increase in the inflation rate."[8]

Misery and crime[edit]

Some economists[who?] posit that the components of the Misery Index drive the crime rate to a degree. Using data from 1960 to 2005, they have found that the Misery Index and the crime rate correlate strongly and that the Misery Index seems to lead the crime rate by a year or so.[9] In fact, the correlation is so strong that the two can be said to be cointegrated, and stronger than correlation with either the unemployment rate or inflation rate alone.[citation needed]

Data sources[edit]

The data for the misery index is obtained from unemployment data published by the U.S. Department of Labor (U3) and the Inflation Rate (CPI-U) from the Bureau of Labor Statistics. The exact methods used for measuring unemployment and inflation have changed over time, although past data is usually normalized so that past and future metrics are comparable.

See also[edit]

References[edit]

  1. ^ "The US Misery Index". Inflationdata.com.
  2. ^ "US Misery Index by President".{{cite web}}: CS1 maint: url-status (link)
  3. ^ Robert J. Barro. "Reagan Vs. Clinton: Who's The Economic Champ?". Bloomberg.
  4. ^ Steve H. Hanke (March 2011). "Misery in MENA". Cato Institute: appeared in Globe Asia.
  5. ^ Steve H. Hanke (May 2014). "Measuring Misery around the World". Cato Institute: appeared in Globe Asia.
  6. ^ Nitzan and Bichler (2009). Capital as Power: A Study of Order and Creorder. RIPE Series in Global Political Economy. Routledge. pp. 384–386.{{cite book}}: CS1 maint: uses authors parameter (link)
  7. ^ Hanke, Steve H. (14 April 2021). "Hanke's 2020 Misery Index: Who's Miserable and Who's Happy?". National Review. Retrieved 23 March 2022.{{cite web}}: CS1 maint: url-status (link)
  8. ^ Di Tella, Rafael; MacCulloch, Robert J. and Oswald, Andrew (2001). "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness" (PDF). American Economic Review. 91 (1): 335–341, 340. doi:10.1257/aer.91.1.335. S2CID 14823969.{{cite journal}}: CS1 maint: uses authors parameter (link)
  9. ^ Tang, Chor Foon; Lean, Hooi Hooi (2009). "New evidence from the misery index in the crime function". Economics Letters. 102 (2): 112–115. doi:10.1016/j.econlet.2008.11.026.

External links[edit]