Working Paper: NBER ID: w15199
Authors: J. Vernon Henderson; Adam Storeygard; David N. Weil
Abstract: GDP growth is often measured poorly for countries and rarely measured at all for cities or subnational regions. We propose a readily available proxy: satellite data on lights at night. We develop a statistical framework that uses lights growth to augment existing income growth measures, under the assumption that measurement error in using observed light as an indicator of income is uncorrelated with measurement error in national income accounts. For countries with good national income accounts data, information on growth of lights is of marginal value in estimating the true growth rate of income, while for countries with the worst national income accounts, the optimal estimate of true income growth is a composite with roughly equal weights. Among poor-data countries, our new estimate of average annual growth differs by as much as 3 percentage points from official data. Lights data also allow for measurement of income growth in sub- and supranational regions. As an application, we examine growth in Sub Saharan African regions over the last 17 years. We find that real incomes in non-coastal areas have grown faster by 1/3 of an annual percentage point than coastal areas; non-malarial areas have grown faster than malarial ones by 1/3 to 2/3 annual percent points; and primate city regions have grown no faster than hinterland areas. Such applications point toward a research program in which "empirical growth" need no longer be synonymous with "national income accounts."
Keywords: GDP; Economic Growth; Satellite Data; Night Lights; Subnational Regions
JEL Codes: E01; O47; Q1; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| light intensity (L94) | GDP growth (O49) |
| income growth (O49) | light usage (Y20) |
| light growth (O44) | true income growth (O49) |
| non-coastal areas growth (R11) | coastal areas growth (R11) |
| non-malarial regions growth (O55) | malarial regions growth (O55) |