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The Value of Luminosity Data as a Proxy for Economic Statistics

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Abstract

One of the pervasive issues in social and environmental research has been to improve the quality of socioeconomic data in developing countries. Because of the shortcoming of standard data sources, the present study examines luminosity (measures of nighttime lights) as a proxy for standard measures of output. The paper compares output and luminosity at the country levels and at the 1° x 1° grid-cell levels for the period 1992-2008. The results are that luminosity has very little value added for countries with high-quality statistical systems. However, it may be useful for countries with the lowest statistical grades, particularly for war-torn countries with no recent population or economic censuses. The results also indicate that luminosity has more value added for economic density estimates than for time-series growth rates.

Suggested Citation

  • Xi Chen & William D. Nordhaus, 2010. "The Value of Luminosity Data as a Proxy for Economic Statistics," Cowles Foundation Discussion Papers 1766, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1766
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    1. Simon Kuznets, 1934. "National Income, 1929-1932," NBER Books, National Bureau of Economic Research, Inc, number kuzn34-1.
    2. 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.
    3. Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
    4. 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.
    5. Sutton, Paul C. & Costanza, Robert, 2002. "Global estimates of market and non-market values derived from nighttime satellite imagery, land cover, and ecosystem service valuation," Ecological Economics, Elsevier, vol. 41(3), pages 509-527, June.
    6. repec:pri:rpdevs:understanding_ppps_complete_with_abstract_14nov08.pdf is not listed on IDEAS
    7. repec:pri:rpdevs:understanding_ppps_complete_with_abstract_14nov08 is not listed on IDEAS
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Luminosity as an indicator of economic activity
      by Economic Logician in Economic Logic on 2010-09-30 22:38:00
    2. Ritchie asks
      by Tim Worstall in Tim Worstall on 2010-10-01 14:47:40
    3. Illuminating GDP
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2018-09-17 11:25:28

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    Cited by:

    1. Lu, Heli & Liu, Guifang, 2014. "Spatial effects of carbon dioxide emissions from residential energy consumption: A county-level study using enhanced nocturnal lighting," Applied Energy, Elsevier, vol. 131(C), pages 297-306.
    2. Papaioannou, Elias & Michalopoulos, Stelios, 2010. "Divide and Rule or the Rule of the Divided? Evidence from Africa," CEPR Discussion Papers 8088, C.E.P.R. Discussion Papers.
    3. Rajendra Kulkarni & Kingsley Haynes & Roger Stough & James Riggle, 2011. "Light based growth indicator (LBGI): exploratory analysis of developing a proxy for local economic growth based on night lights," Regional Science Policy & Practice, Wiley Blackwell, vol. 3(2), pages 101-113, June.
    4. Maxim L. Pinkovskiy & Xavier X. Sala-i-Martin, 2014. "Lights, camera,...income! Estimating poverty using national accounts, survey means, and lights," Staff Reports 669, Federal Reserve Bank of New York.
    5. Nonso Obikili, 2015. "An Examination of Subnational Growth in Nigeria: 1999-2012," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 335-356, September.
    6. Morten Jerven, 2014. "African Growth Miracle or Statistical Tragedy?: Interpreting Trends in the Data Over the Past Two Decades," WIDER Working Paper Series wp-2014-114, World Institute for Development Economic Research (UNU-WIDER).
    7. Liam Rose & Asha Shepard, 2022. "Examining persistent effects of extractive institutions in the United States," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 142-170, March.
    8. Bros, Catherine & Couttenier, Mathieu, 2015. "Untouchability, homicides and water access," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 549-558.
    9. Dimico, Arcangelo, 2013. "Size Matters: The Effect of the Scramble for Africa on Informal Institutions and Development," MPRA Paper 54550, University Library of Munich, Germany, revised 18 Mar 2014.
    10. Everisto Mugocha & Haroon Bhorat, "undated". "Import tariff pass-through effect and the spatial distribution of domestic consumer goods prices: Zimbabwe (2009-2014)," Working Papers 879, Economic Research Southern Africa.
    11. Jerven, Morten, 2014. "African growth miracle or statistical tragedy? Interpreting trends in the data over the past two decades," WIDER Working Paper Series 114, World Institute for Development Economic Research (UNU-WIDER).
    12. Natalya Rybnikova & Boris Portnov, 2015. "Using light-at-night (LAN) satellite data for identifying clusters of economic activities in Europe," Letters in Spatial and Resource Sciences, Springer, vol. 8(3), pages 307-334, November.
    13. Armey, Laura E. & Hosman, Laura, 2016. "The centrality of electricity to ICT use in low-income countries," Telecommunications Policy, Elsevier, vol. 40(7), pages 617-627.
    14. Arcangelo Dimico, 2017. "Size Matters: The Effect of the Size of Ethnic Groups on Development," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(3), pages 291-318, June.
    15. Hoang Ha Nguyen Thi & Alfons Weichenrieder, 2023. "Tax Haven Welfare and the Crackdown on Secrecy: Evidence from Night Light Emissions," CESifo Working Paper Series 10721, CESifo.
    16. Denis Cogneau & Yannick Dupraz, 2014. "Questionable Inference on the Power of Pre-Colonial Institutions in Africa," PSE Working Papers halshs-01018548, HAL.
    17. Castelló-Climent, Amparo & Chaudhary, Latika & Mukhopadhyay, Abhiroop, 2015. "Tertiary Education and Prosperity: Catholic Missionaries to Luminosity in India," IZA Discussion Papers 9441, Institute of Labor Economics (IZA).
    18. Maxim Pinkovskiy & Xavier Sala-i-Martin, 2015. "Lights, Camera,... Income! Estimating Poverty Using National Accounts, Survey Means and Lights," LIS Working papers 645, LIS Cross-National Data Center in Luxembourg.
    19. Maxim L. Pinkovskiy, 2017. "Growth discontinuities at borders," Journal of Economic Growth, Springer, vol. 22(2), pages 145-192, June.
    20. Faiz Ur Rehman & Noman Ahmad & Muhammad Nasir, 2022. "Political Dynasties and Local Economic Development in Pakistan (Article)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 61(3), pages 415-443.
    21. Michael Wurm & Hannes Taubenböck & Jan Goebel & Stefan Dech & Gert G. Wagner, 2010. "Menschen zählen aus dem All. Möglichkeiten und Grenzen von Satellitendaten zur Abschätzung der Bevölkerungsentwicklung und des Gebäudebestandes in deutschen Städten," RatSWD Working Papers 155, German Data Forum (RatSWD).
    22. Dou, Shiquan & Yue, Chen & Xu, Deyi & Wei, Yi & Li, Hang, 2022. "Rethinking the “resource curse”: New evidence from nighttime light data," Resources Policy, Elsevier, vol. 76(C).
    23. Indaco, Agustín, 2020. "From twitter to GDP: Estimating economic activity from social media," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    24. Li, Huixuan & Chen, Jing & Chen, Zihao & Xu, Jianguo, 2022. "Urban population distribution in China: Evidence from internet population," China Economic Review, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Luminosity; Proxy variable; Measurement error in GDP; Gross grid-cell product;
    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
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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