Economy where you live

Traditional economic analysis has usually ignored geographic factors. Geographic aspects include population, soil conditions, climate, distance from coast lines, etc. In a paper entitled Geography and macroeconomics: New data and new findings, Professor William Nordhaus at Yale University explored world-wide geographic effects of economy. The data present a new clear view of the world, not to mention also producing cool pictures

The study divides the world into 64,800 ‘cells’, with each cell corresponding to 1°-longitude and 1°-latitude, of which around 19000 are terrestrial cells outside Antartica. The study measures the Gross Cell Product, a new metric akin to the Gross Domestic Product, but for each cell instead of for a country.

One clear, and paradoxical, result of this study confirms earlier work. To use the paper’s words:

Coldest regions have an output per capita ≈12 times that of warmest regions.

So what does all this mean? We now have a new way to look at the world and the world economy, and that can be used to do good things.

Visit the Geographically Based Economic Data (GEcon) website for the data and methodology.

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