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

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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.

Suggested Citation

  • William D. Nordhaus & Xi Chen, 2012. "Improved Estimates of Using Luminosity as a Proxy for Economic Statistics: New Results and Estimates of Precision," Cowles Foundation Discussion Papers 1857, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1857
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d18/d1857.pdf
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    References listed on IDEAS

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    1. Johnson, Simon & Larson, William & Papageorgiou, Chris & Subramanian, Arvind, 2013. "Is newer better? Penn World Table Revisions and their impact on growth estimates," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 255-274.
    2. Dale W. Jorgenson, 2009. "A New Architecture For The U.S. National Accounts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 1-42, March.
    3. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    4. Simon Kuznets, 1937. "National Income and Capital Formation, 1919-1935," NBER Books, National Bureau of Economic Research, Inc, number kuzn37-1.
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    Cited by:

    1. Nicolene Hamman & Andrew Phiri, 2022. "Using Nighttime Luminosity as a Proxy for Economic Growth in Africa: Is It a Bright Idea?," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 20(2 (Summer), pages 139-165.
    2. Achim Ahrens, 2015. "Civil conflicts in Africa: Climate, economic shocks, nighttime lights and spill-over effects," SEEC Discussion Papers 1501, Spatial Economics and Econometrics Centre, Heriot Watt University.

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    More about this item

    Keywords

    Luminosity; Output measurement; National accounts; Proxy measures;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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