Improved Estimates of Using Luminosity as a Proxy for Economic Statistics: New Results and Estimates of Precision

45 Pages Posted: 1 Apr 2012  

William D. Nordhaus

Yale University - Department of Economics; Cowles Foundation, Yale University; National Bureau of Economic Research (NBER)

Xi Chen

Department of Health Policy and Management; Yale University - Department of Economics; Yale University - Yale Institution for Social and Policy Studies; IZA

Date Written: March 29, 2012

Abstract

Previous work has analyzed whether luminosity data contain useful information for estimating economic output and concluded that there was significant promise for regions with poor quality economic statistics. The present paper examines alternative measures of the precision of the estimates using bootstrap and prior estimates of the errors for both the luminosity quality and the national accounts quality. Based on the new results, we conclude: First, for countries with high quality systems, there is no reason to use luminosity data as a supplement to standard data in any context where standard data are available. Second, we find that there is no advantage at present of using lights data for time-series corrections for any purposes where standard data are available. Third, for countries with low quality statistical systems, the estimates suggest that there may be substantial information in the luminosity data for cross-sectional estimates of output. Fourth, the major concerns about the use of lights as a proxy involve uncertainties about the precision of standard national accounts data. Finally, we recommend that future work be concentrated on integrating luminosity data into the cross sectional estimates of national and regional output primarily for countries with poor quality statistical systems.

Keywords: Luminosity, Output measurement, National accounts, Proxy measures

JEL Classification: E01, O47, O5, Q4

Suggested Citation

Nordhaus, William D. and Chen, Xi, Improved Estimates of Using Luminosity as a Proxy for Economic Statistics: New Results and Estimates of Precision (March 29, 2012). Cowles Foundation Discussion Paper No. 1857. Available at SSRN: https://ssrn.com/abstract=2030960 or http://dx.doi.org/10.2139/ssrn.2030960

William D. Nordhaus (Contact Author)

Yale University - Department of Economics ( email )

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Cowles Foundation, Yale University ( email )

Box 208281
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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Xi Chen

Department of Health Policy and Management ( email )

60 College St
New Haven, CT 06520
United States

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Yale Institution for Social and Policy Studies ( email )

77 Prospect Street
New Haven, CT 06520
United States

HOME PAGE: http://isps.yale.edu/team/xi-chen

IZA ( email )

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