Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492

42 Pages Posted: 14 May 2009 Last revised: 16 Jul 2009

Jonathan Hersh

University of Pennsylvania - The Wharton School

Hans-Joachim Voth

University of Zurich - UBS International Center of Economics in Society; Centre for Economic Policy Research (CEPR)

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Date Written: July 17, 2009

Abstract

Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.

Keywords: Economics of New Goods, Age of Discovery, Consumption, Early Modern Europe, Living Standards, Unified Growth, “Malthus to Solow”

JEL Classification: D12, D60, F10, N33

Suggested Citation

Hersh, Jonathan and Voth, Hans-Joachim, Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492 (July 17, 2009). Available at SSRN: https://ssrn.com/abstract=1402322 or http://dx.doi.org/10.2139/ssrn.1402322

Jonathan Hersh

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Hans-Joachim Voth (Contact Author)

University of Zurich - UBS International Center of Economics in Society ( email )

Raemistrasse 71
Zuerich, 8006
Switzerland

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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