Misery index (economics)

The misery index is an economic indicator, created by economist Arthur Okun. The index helps determine how the average citizen is doing economically and it is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country.^[1]

Misery index by US presidential administration[]

^[2]

Variations[]

Harvard Economist Robert Barro created what he dubbed the "Barro Misery Index" (BMI), in 1999.^[3] The BMI takes the sum of the inflation and unemployment rates, and adds to that the interest rate, plus (minus) the shortfall (surplus) between the actual and trend rate of GDP growth.

In the late 2000s, Johns Hopkins economist Steve Hanke built upon Barro's misery index and began applying it to countries beyond the United States. His modified misery index is the sum of the interest, inflation, and unemployment rates, minus the year-over-year percent change in per-capita GDP growth.^[4]

Hanke has recently constructed a World Table of Misery Index Scores by exclusively relying on data reported by the Economist Intelligence Unit.^[5] This table includes a list of 89 countries, ranked from worst to best, with data as of December 31, 2013 (see table below).

World Table of Misery Index Scores as of December 31, 2013.

Political economists Jonathan Nitzan and Shimshon Bichler found a negative correlation between a similar "stagflation index" and corporate amalgamation (i.e. mergers and acquisitions) in the United States since the 1930s. In their theory, stagflation is a form of political economic sabotage employed by corporations to achieve differential accumulation, in this case as an alternative to amalgamation when merger and acquisition opportunities have run out.^[6]

Hanke's 2020 Misery Index[]

Ranked from worst to best[7]
Rank	Country	Misery Index
1	Venezuela	3827.6
2	Zimbabwe	547.0
3	Sudan	193.9
4	Lebanon	177.1
5	Suriname	145.3
6	Libya	105.7
7	Argentina	95.0
8	Iran	92.1
9	Angola	60.6
10	Madagascar	60.4
11	Brazil	53.4
12	South Africa	49.3
13	Haiti	48.9
14	Kyrgyzstan	47.1
15	Nigeria	45.6
16	Eswatini	42.7
17	Lesotho	42.4
18	Peru	42.2
19	Zambia	41.6
20	South Sudan	41.2
21	Turkey	41.2
22	Namibia	40.7
23	Gabon	40.5
24	Congo	40.3
25	Botswana	39.7
26	Iraq	39.5
27	São Tomé and Príncipe	39.3
28	Liberia	39.1
29	Jamaica	38.6
30	Malawi	37.9
31	Jordan	37.9
32	Guinea	36.8
33	Uruguay	36.7
34	Armenia	36.7
35	Montenegro	36.2
36	Tunisia	36.1
37	Ethiopia	36.1
38	Honduras	35.8
39	India	35.8
40	Panama	35.7
41	Colombia	35.4
42	Mongolia	35.4
43	Georgia	34.8
44	Uzbekistan	34.1
45	Dominican Republic	34.0
46	Ukraine	33.5
47	Saudi Arabia	33.1
48	Algeria	32.7
49	Pakistan	32.5
50	Costa Rica	32.4
51	Paraguay	32.0
52	Trinidad and Tobago	31.5
53	Greece	31.3
54	Mauritius	30.4
55	Gambia	30.2
56	Cape Verde	29.9
57	Bolivia	29.9
58	Kazakhstan	29.5
59	Guatemala	29.3
60	Burundi	28.7
61	Philippines	28.3
62	Azerbaijan	28.2
63	Spain	28.2
64	North Macedonia	28.1
65	Belize	27.8
66	Democratic Republic of the Congo	27.4
67	Equatorial Guinea	27.1
68	Comoros	26.2
69	Myanmar	26.2
70	El Salvador	26.0
71	Mozambique	25.8
72	Nicaragua	25.7
73	Mexico	25.6
74	Sri Lanka	24.3
75	Chile	23.9
76	Albania	23.8
77	Bosnia and Herzegovina	23.8
78	Iceland	23.5
79	Ecuador	23.3
80	Fiji	23.2
81	Mauritania	23.2
82	Morocco	22.8
83	New Zealand	22.2
84	Belarus	22.0
85	Italy	22.0
86	Oman	21.6
87	United Kingdom	22.5
88	Egypt	20.9
89	Indonesia	20.9
90	Kenya	20.8
91	Vanuatu	20.4
92.	Kuwait	20.3
93	Papua New Guinea	20.1
94	Russia	19.9
95	Nepal	19.9
96	Romania	18.5
97	Serbia	18.4
98	France	18.4
99	Croatia	18.3
100	Hong Kong	18.2
101	Canada	18.1
102	Malta	18.0
103	Portugal	18.0
104	Uganda	17.6
105	Mali	17.5
106	Estonia	17.1
107	Latvia	17.1
108	Slovenia	17.0
109	United States	16.7
110	Moldova	16.4
111	Cyprus	16.3
112	Slovakia	16.2
113	Bulgaria	16.0
114	Laos	16.0
115	Australia	15.9
116	Burkina Faso	15.9
117	Cuba	15.8
118	Czech Republic	15.7
119	Cameroon	15.5
120	Belgium	15.4
121	Hungary	14.8
122	Singapore	14.6
123	Austria	14.5
124	Lithuania	14.5
125	Malaysia	14.5
126	Guinea-Bissau	14.4
127	Israel	14.4
128	Luxembourg	14.3
129	Bangladesh	14.0
130	Poland	13.9
131	Vietnam	13.4
132	Bahrain	13.2
133	Central African Republic	13.2
134	Netherlands	13.0
135	Ireland	12.9
136	Finland	12.8
137	Norway	12.8
138	Sweden	12.7
139	Thailand	12.6
140	Denmark	11.8
141	United Arab Emirates	11.8
142	Tanzania	11.6
143	Chad	11.6
144	Tonga	11.4
145	Germany	10.9
146	Côte d'Ivoire	10.8
147	Rwanda	10.6
148	Niger	10.5
149	Togo	9.5
150	Switzerland	8.6
151	South Korea	8.3
152	China	8.3
153	Japan	8.1
154	Qatar	5.3
155	Taiwan	3.8
156	Guyana	−3.3

Criticism[]

A 2001 paper looking at large-scale surveys in Europe and the United States concluded that unemployment more heavily influences unhappiness than inflation. This implies that the basic misery index underweights the unhappiness attributable to the unemployment rate: "the estimates suggest that people would trade off a 1-percentage-point increase in the employment rate for a 1.7-percentage-point increase in the inflation rate."^[8]

Misery and crime[]

Some economists^[who?] posit that the components of the Misery Index drive the crime rate to a degree. Using data from 1960 to 2005, they have found that the Misery Index and the crime rate correlate strongly and that the Misery Index seems to lead the crime rate by a year or so.^[9] In fact, the correlation is so strong that the two can be said to be cointegrated, and stronger than correlation with either the unemployment rate or inflation rate alone.^{[citation needed]}

Data sources[]

The data for the misery index is obtained from unemployment data published by the U.S. Department of Labor (U3) and the Inflation Rate (CPI-U) from the Bureau of Labor Statistics. The exact methods used for measuring unemployment and inflation have changed over time, although past data is usually normalized so that past and future metrics are comparable.

See also[]

• Elder Index

References[]

External links[]

• The current and historical Misery Index
• The Misery Index by President
• The Misery Index By Year
• Cato Publications Commentary
• Correlations of Misery Index and Consumer Sentiment