Satellite images of night time lights offer better GDP Growth measurements

Washington, September 6 (ANI): Three Brown University economists have come up with a unique way for measuring economic growth in developing countries-using images of night time lights as seen from outer space.

In a National Bureau of Economic Research working paper, J. Vernon Henderson, Adam Storeygard, and David N. Weil point out that measurements of economic growth often fall short for developing countries, particularly in sub-Saharan Africa, and are rarely calculated at all for cities throughout the world.

They say that it is possible to improve GDP estimates for such areas by using satellite images of night time lights.

The authors cite the Penn World Tables, one of the standard compilations of data on income, which rank countries with grades A through D by the quality of their GDP and price data.

They say that nearly all sub-Saharan African countries get a grade of C or D, which is interpreted as roughly 30 or 40 percent margin of error.

They also say that several countries-including Iraq, Myanmar, Somalia, and Liberia-do not appear in the table.

To improve these estimates, the three economists suggest combining measured income data with the changes observed in a country's "night lights" as seen from outer space.

They use U.S. Air Force weather satellite picture composites to look at the changes that have occurred in a region's light density over a 10-year period.

"Consumption of nearly all goods in the evening requires lights. As income rises, so does light usage per person, in both consumption activities and many investment activities," they write.

Upon applying the novel method to countries with low-quality national income data, the researchers observed that their estimates were significantly different.

According to them, lights in the Democratic Republic of Congo suggested a 2.4-percent annual growth rate in GDP, while official estimates suggested a negative 2.6-percent growth over the same time period.

At the other end, Myanmar has an official growth rate of 8.6 percent a year, but the lights data imply only a 3.4-percent annual growth rate.

Henderson, Storeygard, and Weil say that they do not envision the lights density data as a replacement for official numbers.

They, however, insist that using the lights density in addition to existing data from agencies like the World Bank can lead to a better indicator of how these economies really are performing.

"Our hope is that people start using this, either when they don't have actual data on economic growth ... or when the numbers are pretty bad. This is just a way to get better estimates," said Henderson, a professor of Economics. (ANI)