Brad DeLong — William Nordhaus: Do Real-Output and Real-Wage Measures Capture Reality?

William Nordhaus wrote a book on the history of light. I heard his elevator speech about it on NPR several years ago. Here's a transcript. It's short.

I found his talk interesting in that we now take on-demand supply of light and electricity for granted at negligible cost. This post is based on it cost and availability  of lumens historically. Most of us probably don't realize how good we have it — until the power goes down temporarily.

Units of different kinds of energy are more relevant in economic history as a numeraire rather than physical goods like gold and silver, which tend to be used instead of energy — apparently owing to close relationship of the metals with money historically. But taking the metals as numeraire rather than energy could produce a distorted picture.

Nordhaus looks at a unit of energy, in this case lighting, per hour of work.

Energy is the driver of productivity and economic activity. It is possible to have a thriving economy without monetary exchange but not without energy use. Human labor is also a highly sophisticated form of energy use.

Grasping Reality
Reading: William Nordhaus: Do Real-Output and Real-Wage Measures Capture Reality?
Brad DeLong | Professor of Economics, UCAL Berkeley