Friday, January 15, 2010


It’s difficult to get many people to admit to the importance of economic growth for human well-being. Many deny the importance of improved living standards, and denigrate individual aspects of improved lifestyles in order to criticize the “agenda of capitalists”.

The next time this comes up in casual conversation, you need to think about the Haitian earthquake.

Haiti is the poorest country in the western hemisphere. The U.S. is, of course, the richest. I measure both of those by real GDP. Per capita real GDP is at least 40 times higher in the U.S. than in Haiti.

Haiti has been wrecked by the earthquake, and estimates are that there are tens of thousands of dead, and that the number may go into 6 figures.

In 1989, an earthquake of the same size hit the San Francisco Bay area (it occurred during warm-ups of a World Series game, and was broadcast live – although you didn’t see much other than the picture cut out). Sixty-three people died.

The message here is that a 40:1 improvement in real GDP per capita is associated with something like a 1000:1 improvement in the number of deaths.

To me, this suggests that real GDP is tracking something very important, and in fact is underestimating it.

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