HIAS-E-35

Purchasing Power Disparity:
Who Could Consume More before 1914?
Peter Lindert
University of California - Davis and NBER

October 2016

Hitotsubashi Institute for Advanced Study, Hitotsubashi University
2-1, Naka, Kunitachi, Tokyo 186-8601, Japan
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http://hias.ad.hit-u.ac.jp/
HIAS discussion papers can be downloaded without charge from:http://hdl.handle.net/10086/27202
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October 2016
“Purchasing Power Disparity:
Who Could Consume More before 1914?”
Peter Lindert (UC-Davis and NBER)

ABSTRACT
Economic historians’ Divergence debates since 2000 have asked a different
question from that asked by Angus Maddison. The issue has become “when did
countries’ contemporaneous purchasing powers diverge?”, not “when did countries’
productivity grow at different rates?” The two questions have different answers,
especially before 1914. Using pre-1914 current-price comparisons of realpurchasing powers on six continents, this article sketches some historical
geography of the departures from the conventional Maddison estimates.
The underlying reason for the divergence between projections back from 1990
and current-price comparisons from long ago is that before the great 1870-1914 waveof trade globalization, consumer staples were not traded over great distances, andregions specialized in narrow luxury trade. Inter-continental price ratios for
subsistence goods thus varied more widely than since 1914.
The new measures open up a new economic history of international andintra-national differences in purchasing power before 1914. Northwest Europe wasfurther ahead of Asian countries than earlier measures have shown, apparently due
to a Gerschenkron effect in the Maddison approach. On the other hand, Northwest
Europe was behind America and Australia across the nineteenth century.
I.
II.
III.

IV.
V.
VI.

CONTENTS
What do we want to compare?
A disturbing initial result: America versus Britain
Global departures from Britain before 1914
A. Japan 1602-1912
B. China 1840 and 1885
C. India 1595 and 1870
D. Java 1820-1910
E. Western Europe 1525-1910
F. Elsewhere
G. Patterns in the early PP disparities before 1914
H. And since 1914?
How did subsistence cost ratios relate to purchasing power ratios?
Adding non-staple prices would not erase the Eurasian contrasts
A take-away menu

2
5
8
10
12
14
16
17
18
19
19
22
25
27

My thanks to Professors Kyoji Fukao, Chiaki Moriguchi, Osamu Saito, and Masanori
Takashima for helpful comments on an earlier presentation of this paper at
Hitotsubashi Institute for Advanced Study, Hitotsubashi University.

1

I. What do we want to compare?
To understand how some countries became richer than others, we want to know
how and when their relative purchasing power differed in the past. To trace out how we
got to today’s gaps between rich and poor, say between Britain and Asia, requires
answering one of these two similar-looking questions for any past date, say 1700:(1) How did the purchasing power of the average British resident compare withthat of the average Asian back in 1700, given what we know about their averagepurchasing powers today, and about their GDP growth rates since 1700?
(2) How did the purchasing power of the average British resident compare withthat of the average Asian back in 1700, given their nominal (current-price) GDPs and theprices they paid back in 1700?
At first glance, the two questions might seem to be the same, and might seem have acommon answer. After all, the questions read exactly the same, until we read about what
data are given. Won’t we get the same answer either way, if we have full data?
The two questions would indeed have such equivalent answers if we lived in aworld where each country produced only one good with only one human input. Supposethat every country’s population produced only one good called “GDP thing,” which could
be used for anything. That is, suppose that this GDP thing could be eaten, shaped into afactory, or made to perform a Bach cantata. The difference in the two countries’ perperson purchasing power would be the same thing as the difference in their average
human productivity in any year. We can compare their average abilities to buy the GDP
thing back in 1700, either by finding the ratio of their quantities per person today, andknowing how fast the two average quantities have grown since 1700, or by going to thearchives and finding its values and prices in the two places back in 1700.
Yet we live in a world of multiple products, and the “index number problem” ismassive. For the real world of multiple products and varying budget shares, the different
kinds of comparisons would be algebraically inconsistent, even if we had perfect data.
Using today’s weights for different products is not the same as using weights that reflect2

their importance back in 1700. Indeed, the products themselves come and go. A
comparison of average purchasing powers in 1700 using the prices and quantities ofoatmeal, mutton, lamp oil, and carts in 1700 will give a different answer from a calculationthat uses national growth rates and today’s prices of pizza, Big Macs, electric lighting, andcars.
Since they will give different answers, these two approaches are not the same, andhard choices have to be made. At the close of the twentieth century, the first approach
was preferred, because we had better numbers for comparing people’s purchasing power
between, say, Britain and Asia in 1990, and we had pretty good ideas of national growth
rates going back in time. Using this indirect “projection” approach, the late Angus
Maddison gave us the best available history of every country’s real incomes, or purchasing
power. True, the national growth estimates only went back about a hundred years, so forany time before 1870 Maddison had to use rougher guesstimates about growth rates andabout when societies first rose about bare subsistence. Using this projection technique,some scholars thought Asia was as rich as Britain in 1700 or so, but Maddison’s own
projections convinced him that Britain and Northwest Europe had been far ahead formany centuries. His estimates still dominate our view of past income levels.1
Starting around the year 2000, some economic historians chose the second path,the one that used only numbers from history itself. Going directly to historical data,
without projections back from today’s international comparisons, has the drawback thatthe needed data are still scarce and questionable. Yet it has the obvious virtue of beingtrue to the historical context. It also simplifies by giving us just one set of tough index
number decisions (say, British conditions versus Asian conditions in 1700) instead ofthree sets of them (choosing index numbers for British growth in a changing world, for
Asian growth in a changing world, and for British conditions versus Asian conditions
today). The direct historical path also benefits from the fact that the electronic revolution
is improving our quantitative view of deeper history faster than our view of alreadyquantified recent history.2
1 See Maddison 1995, 2001, 2010; and Maddison Project 2013.
2 For the growing (and downloadable) quantitative global history of incomes, prices, andwage rates, see the internet sites of the Global Price and Income History Group3

Using the second approach, the “direct” or “current-price” approach, these scholars
have opened up a whole new debate about “the Great Divergence” of purchasing power
between Europe and Asia, and some “Little Divergences” of purchasing power within
Europe and its overseas extensions. Were the leaders in the nineteenth century also theleaders in the sixteenth century or earlier? And when did American catch up to Britain?
The leaders here were Kenneth Pomeranz on China versus Europe, Robert Allen and his
co-authors on real wage rates in five continents, and Marianne Ward and John Devereux
on America versus Britain in the nineteenth century.3
This paper follows the second path, preferring comparisons that use data only fromthe historical contexts shared by the comparison countries. It generalizes and globalizes
the recent literature, going beyond China versus Europe or America versus Britain, andjudging overall national purchasing powers instead of real wage rates. I offer three kindsof tentative conclusions:• The direct comparisons, the ones using only historical data, yield international
contrasts that are often very different from those that Angus Maddison saw
through the lens of long-run back projection.
• The revisions reveal some rough patterns. If the direct comparisons are correct,
Maddison underestimated Eurasian inequalities. Before 1914, Asia was evenfurther behind Britain in average purchasing power. On the other hand, rich settler
countries like America and Australia were even richer, relative to Britain, than
Maddison and others thought.
• The discrepancies between the new direct historical comparisons and Maddison’sback-projections seem to relate to the greater share of non-tradables in the world
economy before 1870, to the Balassa-Samuelson effect on relative purchasing
powers, and to a Gerschenkron effect inherent in international comparisonsanchored in a postwar price base.

(gpih.ucdavis.edu), the International Institute of Social History (iisg.nl/hpw), and the
Maddison Project site at the University of Groningen (Bolt and van Zanden 2013).
3 See Pomeranz (2000, 2005, 2011), Allen (2001, 2005, 2007, 2013), Allen et al. (2011,2012), Ward and Devereux (2003, 2004, 2006, 2016), and for Latin America versus
Europe, Arroyo Abad, Davies, and van Zanden (2012).
4

The rest of this paper travels through three stages to reach to these concluding
suggestions. First, Sections II and III take a tour of some benchmark historicalcomparisons on six continents, using some available benchmarks on nominal incomes per
capita and the prices of staple goods to generate measures of subsistence (or “barebones”)
purchasing power per capita for various countries relative to Great Britain or the United
Kingdom. Each of these ratios of the form (other country / Britain) is compared with thecorresponding ratio from the Maddison estimates, in search of discrepancies. Section IV
notes a striking pattern in the relative costs of subsistence goods before and after 1870,
and links this pattern to the Balassa-Samuelson effect, using the fact that subsistence
goods were non-tradable and had a large budget share.
The second stage confronts the tension between the broad GDP per capita
numerator and the narrow “barebones” price denominator of each of our ratios forderiving real purchasing power: Shouldn’t one divide nominal GDP by a GDP deflator thatcovers the whole economy? Having internationally comparable prices only for the mostcommon staple goods would seem to be a weakness. Section V of the paper turns thispotential weakness of the purchasing-power ratio into a strength. True, other goods –luxury consumer goods and capital goods in particular – are harder to compare acrosscountries or eras because these goods are so heterogeneous and changing in quality. Yet I
present different kinds of evidence suggesting that the relative price of such luxury andcapital goods was lower in Northwest Europe than anywhere else in the world between
1500 and 1914.
The final stage interprets this new evidence in Section VI. The departures from
Maddison’s estimates are tentatively explained, and implications are drawn for revising
our history of international and intra-national inequalities.

5II. A disturbing initial result: America versus Britain
Economic historians have heavily used Angus Maddison’s pioneering estimates. At
the same time, some have recognized that his estimates could give misleading impressions
about the comparisons of real incomes in the past. Maddison himself repeated general
warnings about his numbers, and invited revisions based on better evidence. The current
Maddison Project aims to add such revisions, as better evidence comes available.4 While
many have noted the general possibility that Maddison’s international comparisons might
be misleading, only a few have stepped forward to offer specific alternative measures. For
the world as a whole back to 1820, Leandro Prados de la Escosura (2000) offered aplausible compendium of alternative conjectures of GDP per capita for high-income
countries back to 1820, based on statistical regressions capturing patterns from 19501990 in the relationship of GDP per capita in the International Comparisons Project (Penn
World Tables) to differences in economic structure. Prados’s conjectures, like those of
Maddison, call out for confirmation or contradiction based in deeper evidence on as manybilateral comparisons as possible.5 The two bilateral comparisons that have attracted themost attention are America versus Britain and China versus Northwest Europe. The
American-British comparison, unlike that between China and Northwest Europe, offers a
disturbingly sharp challenge to Maddison’s view of relative real incomes.
The new American-British direct (current-price) comparisons depart dramaticallyfrom Maddison’s projections of the ratio of American to British purchasing power since
1700. The conventional wisdom quantified by Angus Maddison is that British colonial
America was far behind the mother country in average living standards, and that theindependent United States continued to lag behind Great Britain in incomes until around1900. So say the Maddison Project estimates expressed as an American / British ratio in
Figure 1. Indeed, the current Maddison Project estimates for 1720 imply that per capita

4 Maddison (1995), Maddison (2001, p. 44), Bolt and Van Zanden (2014, p. 628). For up-

to-date online revisions, visit Bolt and Van Zanden (2013 version cited here).

5 Prados (2016) has now underlined his critique of the Maddison procedure withcalculations of the biases it introduces in the case of Spanish history.

6

incomes in the British mainland colonies of North America were only 53 percent of thoseof Great Britain, and still only 79 percent of British average incomes 150 years later.
Such conjectural contrasts have been challenged. Even without delivering
alternative numbers, one may ask how it could be that so many English kept migrating toAmerica, where the average incomes were allegedly so much lower, even among whites
alone. That is mathematically feasible, of course, either if migrants kept repeating thesame economic mistake, or if American attracted only the dregs of British society for
generations. Still, the idea is at best counter-intuitive. Another challenge has come fromthe American-British contrasts reported by Prados (2000), who has implied that theUnited States had already matched Britain in average income as of 1820, the earliest date
to which he applied his regression-based technique. Meanwhile, Marianne Ward and John
Devereux (2003, 2004, 2006), compared nominal incomes and prices contemporaneously
for the United States and Britain in the nineteenth century. They found an even greater
American advantage over Britain.6 Several other scholars, including Robert Allen, havebegun to make direct international comparisons between workers’ real purchasing
powers. Where these studies included North America, they similarly found that real
wages in the thirteen counties were near that of London in 1725-1749, and well above theLondon real wage later in the eighteenth century (Allen et al. 2012).
Jeffrey Williamson and I have now compared American and British purchasing
powers per capita, producing new estimates for the entire period 1650-1870 (Lindert andWilliamson, 2016, Chapters 2-6 and Appendices A-G). These independent estimates of
nominal national income for America, anchored in the benchmarks 1774, 1800, 1850,
1860, and 1870, are derived from the income side of the national accounts. We estimatethat the nominal national income of the thirteen mainland colonies in 1774, on the eve of
their rebellion, was about 30 percent higher than the guesses made by other scholars. Our
nominal income figures are similarly above those of earlier scholars for 1850-1870,
though our 1800 benchmark produced little disagreement with past guesses. For thenominal income of Great Britain, we have used the new estimates from Broadberry et al.
(2015). The nominal incomes on both sides of the ocean are then deflated by the
6 Broadberry (2003) expressed doubts about the initial comparisons by Ward andDevereux.

7

respective costs of a fixed barebones subsistence bundle, as estimated by Robert Allen. In
effect, our direct comparison addresses the same question implicitly addressed by Pradosand by Ward and Devereux: How did the two countries compare in their ability to use allof nominal national income to purchase a given bundle of consumer products, where alldata come from the same year? And, as Figure 1 shows, we get an even stronger AngloAmerica contrast.7
There is more to the emerging story of American-British contrasts than just thefinding that America was ahead. Our new estimates have a richer history to tell, one that
includes Figure 1’s three episodes in which the Americans briefly lost their leadership –during the Revolution, during the Civil War decade, and again in the early 1930s. The
moment of greatest American advantage over Britain in purchasing power was, of course,
at the end of World War II. Over the long run, the average America has usually had apurchasing power about 30 percent about the British average -- in the century before the
Revolution, or in the mid-nineteenth century, or around 1900, or even today. Maddison’s
belief that America did not surpass Britain in average purchasing power until 1900 is off
the mark by at least two centuries, according to direct current-price comparisons from thepast.8The sharp challenge to Maddison’s view of American versus British incomes raises
an obvious question, to which we now must turn: What would happen to the relative
positions of other countries over recent centuries, if we again replace his back-projections
with direct current-price historical comparisons? How would the new procedure and new
evidence affect the different “Great Divergence” and “Little Divergence” debates?
III. Global departures from Britain before 1914

7 Vincent Geloso (2015a, 2015b) similarly found that the ability to buy a barebones bundle

was higher for workers in colonial French Canada than in France, 1688-1760. However,this Canada-France contrast did not hold up when the comparison involved more middleclass “respectability” bundles.
8 See the detailed evidence in Lindert and Williamson (2016, Chapters 2, 3, 5, 6, and 10,
and related appendices). We note that broadening the price deflator, going beyond
common staples to include luxuries and capital goods, would dampen the AmericanBritish contrast in estimates only slightly.
8For certain countries and benchmark dates, the direct current-price approach canserve as a valuable cross-check against the Maddison back-projection approach to thehistory of relative purchasing power.9 Which countries and benchmark dates? That
depends on data availability. This paper exploits the occasional existence of credible
measures of nominal GDP (or GNP) per person, and of prices in both of two countries
being compared. For readers’ convenience, all countries will be compared with the samebase country, Britain, where Britain means England and Wales up to 1700, then GreatBritain 1700-1870, then the United Kingdom including all of Ireland until World War I,
and then today’s United Kingdom.10 What makes the British base so convenient is thelandmark Broadberry-Campbell-Klein-Overton-van Leeuwen study of British Economic
Growth 1270-1870 and the abundance of English historical price series since 1209, mainly
the price series collated by Gregory Clark.11
For the nominal GDP numerator, the usual choice is between an aggregate value ofall production, an aggregate value of all expenditures on what the same nation produces,
and an aggregate value of all income earned from production.12 In a perfect-data world all
three values would be equal. Where the data yield a credible aggregate value from theincome side, that version of GDP because it is the most distant from the information usedby Maddison, so that it holds the most promise as an independent valuation. In manyother cases, however, the data appear to have been more solid on the production side, theside used most heavily by Stephen Broadberry and his co-authors. Where the production
9 Comparing countries’ real incomes in the past was not Maddison’s only objective or his

only achievement, however. His work has also served as the best statement of what is
known about the global history of national growth rates in GDP.
10 To see the per capita income adjustments of moving from one national unit to another,
one can use these (Baxter) per capita income ratios from 1867: Gt Britain/Eng-Wales =0.961, and UK/Gt Britain /UK = 1.113. Using such ratios to imagine an equivalent GreatBritain before 1700 would call for lowering the income per capita for England and Walesby 3.9%, and to imagine an equivalent Great Britain after 1870 would call for raising the
UK income per capita by 11.3%, and lowering all purchasing-power international ratios by
11.3%. (http://gpih.ucdavis.edu/Distribution.htm, using the file “Baxter EW & UK 1867.”)
11 Broadberry et al. (2015), Clark (2006). Clark’s price series are drawn from thecompilations by Thorold Rogers, the UK Board of Trade, and William Beveridge.
12 The concept we have in mind is actually gross national income, which is virtually thesame as GNP for most economies. Yet we use the term “GDP” (gross domestic product”)
for reader familiarity, ignoring the small quantitative differences between GNP and GDP.
9

side (or expenditure side) is used, however, it will turn out that the most reliable data arealso limited to those products that are most uniform and of most common use.
For the price denominator, data availability again dictates the choice. Here thebinding constraints are familiar. For comparisons across countries or across centuries,
the usual price series are again those of products that are most uniform and of mostcommon use. In study after study, the set of prices ends up covering income-inelastic
goods, or consumer staples, or necessities, plus such homogeneous intermediate goods as
unprocessed grains, fabrics, or minerals. Other products – those consumer goods toward
the luxury end of the spectrum, or capital goods, or services – tend to be tooheterogeneous and too changing in their quality to generate reliable international pricecomparisons or price time series. In the case of prices, unlike quantities, we can sharpen
our international comparisons with a two-stage procedure. For the rest of this section, we
will use the prices of products in a staple-goods “bare-bones” bundle of necessities, à la
Robert Allen, as if it were a comprehensive GDP price deflator. It is not, of course, but inPart V we will able to use a mix of history and economics to establish the direction inwhich having an all-covering GDP deflator would tilt the results obtained by using a simple
subsistence deflator.
Let us turn to some Asian countries featured in the “Great Divergence” debate,
beginning with Japan, a particularly well-researched case.
A. Japan 1602 – 1912
Thanks to the recent work of several scholars, we now have plausible estimates ofJapan’s national product, consumption patterns, and price structure across the Edo Period(Tokugawa Shogunate) and the Meiji Reign. The research team of Jean-Pascal Bassino,
Stephen Broadberry, Kyoji Fukao, Bishnupriya Gupta, and Masanori Takashima (2015) has
estimated Japan’s real and nominal GDP for benchmark years extending from 725 to 1874,
that is, for much of the pre-Edo and Edo periods. Like Broadberry and co-authors for
Britain, they build GDP by sectors, combining information on labor force and productivity
by sector, plus urban population shares, while also applying some likely consumer
expenditure elasticities. Sectors are aggregated into real GDP by expressing all values in10

terms of koku of rice, a common numeraire. Given this conversion to rice units, we canback out the nominal value of GDP in terms of silver using the silver price of rice.
For the years from 1600 on, the nominal GDP numerator can then be divided by thecost of a subsistence bundle, using the separate urban price series for each good. In order
to compare the price of such goods with their price in Britain, one must first deal with thedisconnect between Asian and European dietary habits. European diets featured wheat
bread, rye bread, and oatmeal. None of these were staples in Asian diets, except for breadlike products in North China and North India. Comparing the consumption bundles ofJapan and Britain requires that we develop some equivalency between rice and something
based on wheat or oats. The economist’s usual answer of simply using relative prices
would not work: Rice had a high price in Britain because it was an imported luxury notconsumed by ordinary folk, and there was no reliable price series for wheat flour, wheat
bread, or oatmeal in Japan, where these products were essentially unknown. Robert Allen(2001) introduced a procedure that we follow here. Compare separate daily diets in thetwo countries that would deliver a subsistence level of about 1,940 (kilo-) calories, withthe subsidiary goal of delivering about 80 grams of protein. For each country find a set ofstaples that would deliver this modest daily nutrition at the lowest cost, given local prices.
Given that societies typically consume diets that minimize the cost of a given level ofnutrition, cost minimization will tend to favor the grain that actually prevails in local diets.
Thus in Table 1, the 365-day diet for Japan delivers most of its calories from rice, whileallowing smaller amounts of some other products that were commonly consumed and forwhich we have price series (soybeans, buckwheat, barley, fish). For Britain thecorresponding diet features oats, beans/peas, and meat.
In setting the two diets, it is important to choose foods that are at similar levels of
preparation, while at the same time yielding historical price data. It would not do tocompare highly prepared foods in one country with unprocessed ingredients in the other,since this would impose the costs of preparation on only one of the two countries. We
may think of this problem as avoiding the “let them eat bread” trap. In many European
settings one has price data both for bread and for raw grains. Yet in Asian settings we areusually given data only on the prices of raw grains, such as rice or buckwheat, without
allowing for the fuel, utensils, labor, and other costs of delivering table food. Accordingly,
11

Table 1 gives the European consumer only oats (cheaper than wheat), rather than
prepared bread or oatmeal, to avoid marking up the European relative cost by providing amore useful product. Again, it is important to stick to comparing consumer bundles that
supply the same hedonic final product in both countries.13
Applying available prices to these separate subsistence consumption bundles yields
the bundle costs for Japan and Britain in 1750, displayed in Table 1.14 Repeating thiscalculation for other benchmark years traces a history of Japan’s and Britain’s abilities tobuy the same bundle over the sweep of the Edo period and the Meiji reign, in Figure 2 andTables 2 and 3. Even at the start, around 1602, Britain’s ability to buy the basics was
already well ahead of stagnant Japan, and the lead widened across the eighteenth century.
As historians have long known, Japan’s incomes improved across the Meiji reign, here
represented by the transition from our 1870 benchmark to that for 1912. Less familiar inappearance is the seeming acceleration of British purchasing power over that same 18701912 era. One reason for this improvement seems to be that the new cheapness of grains
and other foods from abroad delivered an egalitarian twist to the first globalization era, as
we shall note again later. Overall, Japan fell further behind Britain in the Edo period, andthen kept pace in the Meiji era.
How do these comparisons of bare-bones purchasing power match up against theJapan/Britain contrasts already provided by Angus Maddison? Both accounts agree thatJapan fell further behind Britain over the whole stretch of the seventeenth throughnineteenth centuries. Yet, as Table 2 quantifies and Figure 3 summarizes, the newcomparisons imply that Japan was always further behind Britain than Maddison’s
projections implied. So far, the America/Britain and Britain/Japan gaps look wider in
the new data than in the back projections: While the new calculations suggest that
Maddison may have missed America’s lead over Britain in the eighteenth and nineteenth
centuries, they also suggest that he understated Britain’s advantage over Japan. To see if

13 Alternatively, where the data permit, one could give the European consumers the same

calorie content in the form of flour instead of raw grain, for the comparison with rice.

14 As shown in the notes to the tables, the prices are averaged over a number of years

around the benchmark year, to smooth out short-run price variation. The number of years
depended on data availability, though a five-year centered average was preferred.
12

there are larger patterns here, let us explore other nations and years, with the help of
Figure 3 and Table 3.
B. China 1840 and 1885
The contrast between China and Europe was, of course, the one that most ignited
the “Great Divergence” debate. Kenneth Pomeranz’s (2000) landmark book suggested
that in the eighteenth century, the early Qing era, Chinese material living standards werestill nearly on a par with those of Europe, and the Lower Yangzi region could have been as
well off as Britain and the Netherlands. If that were true, then the Great Divergence cameafter 1800, and especially after the Opium Wars, with the further implication that foreign
aggression was what dragged down a China that could have continued to be competitive.
Although Pomeranz later modified his stance somewhat, the challenge remained and thedebate continued.15 One result of the subsequent work has been to emphasize the great
probability that China’s average incomes were as high as those in Europe and Japan way
back in the Song and Yuan (Mongol) eras, i.e. from 960 to 1368.16 Angus Maddison, for hispart, continued to agree with David Landes (1999) and others who argued that Europe
was well ahead of China and East Asia since the Middle Ages or earlier.
For China, the present procedure of dividing nominal incomes per capita by thecosts of a barebones consumption bundle is not yet possible for the eighteenth century, acrucial period in the Great Divergence debate. Work must continue on China’s national
product, since estimates are quite shaky so far.17 For the moment, we have only twonineteenth-century benchmarks, for 1840 and “the 1880s,” which we may label 1885. For
1840 the research team of Stephen Broadberry, Hanhui Guan, and David Daokui Li (2014)
has ventured to estimate China’s nominal national product using the currently favored
practice of combining labor force and productivity by sector, urban population shares, andsome assumed consumer expenditure elasticities. For the 1880s, Chang-li Chang (1962,
appendices) built an estimate of China’s GDP to use as a denominator for his detailed
15 Pomeranz (2005, 2011), Prados (2000), Maddison (2001, pp. 47-48), Devries (2011).
16 See Liu (2015).

17 For stern warnings about the existing estimates of GDP for imperial China, see Deng andO’Brien (2016).

13

estimates of gentry incomes at the top of society. Dividing both years’ nominal GDP by thecost of a barebones bundle in Beijing yields the two estimates of purchasing power per
capita that are shown in Table 3 and Figure 3.
For China, more than for Japan, the nineteenth-century estimates support
Maddison’s view of relative purchasing power. The match in guesstimates is quite goodfor 1840, even though very different sources and procedures were used. For 1885 the
new estimates imply that GDP per capita bought the common man less than Maddison
implied. Yet the Chang estimate of GDP in the 1880s may have been too low. He struggled
to limit the frequent suspicions that his official sources had underestimated the area
under cultivation, and his estimates seem to miss miscellaneous manufactures and many
private services. If the true GDP for the 1880s was significantly higher than Chang said,
then again for the 1880s, the new procedures seem to support the Maddison guesstimates
about the ratio of Chinese to British incomes. Yet until one can reach back into theeighteenth century or earlier with credible estimates of China’s nominal GDP per capita
and costs of common consumer goods, such direct current-price comparisons cannot help
resolve the Great Divergence debate.
C. India 1595 and 1870
The same question has arisen for India as for China: Was it far behind the Westeven before the early modern era, in this case meaning before the British incursions?
With India as with the rest of Asia, Maddison sided with those who felt that Asia had been
far behind for centuries. And with India as well, scholars in this century have suggested
revisions in this view. Using available evidence from the scanty quantitative history of
two Indian regions, Prasannan Parthasarathi argued that “in the eighteenth century
standards of living, calculated in terms of grain wages, were comparable between Britain
and South India and Bengal” (2005, p. 106). His emphasis on “grain wages” has since beenechoed by the subsequent literature, which draws on wage rates and the prices of staple
goods, especially foods. Yet few others feel that Indian living standards were “comparable”
to British or European standards as late as 1800. The current split seems to be between
those who feel that back in 1600 Indian real wages were already only about a fifth of
British hence no subsequent Great Divergence (e.g. Broadberry and Gupta 2006 (silver
14

wage comparison); Allen 2007; Roy 2010, and Studer 2015, pp. 145-67, 172-78), andthose who feel that in the Mughal apogee around 1600 Indian incomes were 60-70 percentof the British. This latter view believes in a Great Divergence with the arrival of the East
India Company and the Crown, down to an agreed-on level of Indian poverty in the latenineteenth century.
Fortunately, this wage-based literature has now been supplemented by roughmeasures of nominal income per capita, for the Mughal benchmark 1595 (or c1600) andfor 1860 and beyond. Here, and in Figure 3 and Table 3, we use only the 1595 benchmark
and an 1870 benchmark, for comparison with Maddison’s figures and with the recent
findings of Broadberry, Custodis, and Gupta (2015).18 For India, as for the rest of Asia,
Maddison implied that average purchasing power fell further behind that of Britain, froman India/Britain ratio of over half (0.565) around 1600 to only one-sixth (0.167) in 1870.
The new current-price comparisons agree on the long relative decline, yet at lower initialand final levels: from only 0.289 around 1600 to a very low 0.086 in 1870. The mystery
deepens when we compare the new estimates with those of Broadberry, Custodis, andGupta (BCG). They offer two different results for 1600-1870 using different deflators. The
estimates from the Broadberry-Gupta 2010 study implied an India/Britain ratio 0.145 in
1870 – a slightly more severe impoverishment than Maddison guessed for 1870. Then,
using a silver conversion between rupees and pounds, BCG find that India’s share of the
British average was already only 0.145 around 1600 – so no divergence, just persistent
deep relative poverty for India. Alternatively, with a grain deflator (wheat price), they findthat Mughal India had fully 0.712 of the British average purchasing power around 1600,
before dropping to that 0.145 by 1870. Thus far, for India from 1600 to 1870, we have
two suggestions of a great fall relative to Britain – Maddison’s suggestion about GDP per

18 For 1595, I use the Mughal “national” product from Shireen Moosvi 2008, pp. 2-3,

implying 562.2 million rupees. Her estimates build on Moosvi (1987). Broadberry,
Custodis, and Gupta (2015, p. 70) give a similar number, 559.68 million rupees, for “circa
1600.” For 1870, I use Goldsmith (1983, p. 5), averaging the GDP estimates for 1868-1872.
15

capita, and the BCG grain wage – plus one suggestion of no change at all, namely that silver
wage ratio of 0.145 at both dates.19
Better price evidence is available for comparing India with Britain in both 1600 and
1870. Bob Allen and Roman Studer have amassed a long and detailed history of prices(and wages) for four regions of India from the late sixteenth century to the early twentieth.
These make it possible to compare the ability of GNP per capita to buy hedonicallyequivalent bundles of ten Indian products and nine British products.20 These newcomparisons, richer in prices, find India further behind Britain around 1600 than either
the Maddison guess or the Broadberry-Gupta wheat wage had implied. Yet for 1870, thedifferent estimates do not disagree so much. Specifically, the new estimates have India
falling behind in relative purchasing power from 0.289 around 1600 to 0.156 in 1870.
Figure 3 and Table 3 re-state this result for India. We shall return to the task ofinterpreting this revision, after looking at new clues for other countries.
For India and Japan, then, the tentative new results illuminate a new Divergencecurrently being posed by the authors of a pioneering study of Japan’s national product,
who suggest that there was“a “Little Divergence” within Asia. In contrast to Japan’s persistent growth path
which avoided significant growth reversals, Chinese per capita GDP was on a
downward trajectory from its high point during the Northern Song dynasty …. On
these estimates, Japan overtook China only during the eighteenth century. Like
China, India experienced declining GDP per capita from the Mughal peak under

19 In an earlier article, Broadberry and Gupta (2006, pp. 14-18) offer a plausible

reconciliation of the silver-wage stability and the grain-wage decline, in terms of theadvancing development of the British economy.
20 For the data, at http://gpih.ucdavis.edu, download the file “India prices and wages
1595-1930 (Allen and Studer).” For a fuller presentation and interpretation, see Allen(2007) and the India-related passages of Studer (2015). In my calculations, for both dates,
the Indian bundle consisted of millet, rice, gram, meat, ghee, soap, cloth, candles, fuel, andsugar, and the British bundle consisted of oats, beans, meat, butter, and again soap, cloth,
candles, fuel, and sugar. Food calories and BTU of heating fuel were held the same in bothcountries.
16

Akbar, circa 1600 …. Again, Japan only pulled decisively ahead of India during theeighteenth century.” (Bassino et al. 2015, p. 22)
The new direct comparisons agree, by re-affirming that India fell behind Japan sometime
between 1600 and 1870.
What of other Asian countries? Did they also fall behind Japan at this time? Weturn next to an Asian country that fell behind Japan dramatically, but not until the midnineteenth century.
D. Java 1820-1910
Thanks to recent efforts by Pim de Zwart and Jan Luiten van Zanden (2015, and van
Zanden 2003), we can now compare Javanese purchasing power with that of Britain
during the nineteenth century, using the same barebones deflation of nominal GDP per
capita as in other countries.
Starting with the most recent benchmark, that for 1910, we see a Java that fits thegeneral patterns of relative purchasing power and its relationship to Maddison’s guesses.
As Table 3 and Figure 3 show, crowded Java was far behind Britain (or the Netherlands) inaverage purchasing power, and even father behind than Maddison had conjectured. Yet avery different perspective emerges from Java’s earlier experience. Back in 1820 or 1830,
Java’s average purchasing power was fully 44-45 percent of the British level, according toour estimates. And in that early era, Java’s relative income was well above what Maddison
had implied. As Figure 3 shows, this outcome contrasts with the results for India, China,
and especially Japan.
What could have made Java sink so far in relative purchasing power between 1820
and 1910? While Van Zanden (2003) has explored the possible roles of changes in Dutch
rule and other shocks, it seems likely that the explanation should start with a striking
basic fact about nineteenth-century Java: It had unusually rapid population growth.
Whereas India’s population grew only by 36 percent from 1820 to 1900, Java filled up
with about 5.6 times as many people in 1900 as in 1820, a population growth rate of about
2.2 percent a year (Peper 1970, p. 72). Such crowding presumably raised the relative17

price of rice, as long as the globalization of rice markets remained incomplete, thereby
depressing Java’s relative purchasing power.
E. Western Europe 1525-1910
Western Europe was richer than Asia in Maddison’s estimation. The new estimatesconfirm and magnify this inequality. The same technique of dividing nominal income by a
subsistence-bundle price deflator yields results for Italy since the sixteenth century andfor France and Netherlands from 1820 to 1910 (Table 3 and Figure 3 again). These
countries again appear to have been better off than the four Asian countries, and forFrance and Netherlands, our estimates do not fall below those of Maddison, but instead
tend to agree.
Relative purchasing power in Western Europe is brought into even clearer focus by
Ward and Devereux (2016). Figures 4 and 5 report their comparisons of some developed
countries in 1872 and 1910. Their procedure is different from that of Bob Allen’s
procedure, which we have followed thus far. Ward and Devereux, like most economists,
prefer to blended “superlative” index like the Fisher ideal index. Compromise indices likethe Fisher occupy a middle ground between using (Laspeyres) weights only from the basecontext and using (Paasche) weights only from the comparison context. By contrast, Allen
prefers an older-style Laspeyres index, even though it lacks some desirable mathematicalproperties. We share Allen’s preference, on the grounds that the Laspeyres approachmakes the subsistence bundle something fixed and more understandable for nonspecialists. Nonetheless, we now add the informative Ward-Devereux results in Figures 4
and 5.21
The main revision suggested by Ward and Devereux is to demote British and Swiss
relative purchasing power relative to other advanced countries. On their telling (2006,2016), America was even further ahead of Britain in the nineteenth and early twentiethcenturies than Prados had conjectured, though not as far ahead as in the Lindert-

21 Ward and Devereux presented indices comparing other countries with the United States.

Taking advantage of the transitivity feature of their indices, we have converted tocomparisons with Britain, for better comparability with the results in Figure 3.
18

Williamson view (2016). They also reject the common belief that average purchasing
power was higher in Switzerland than elsewhere in Western Europe.
F. Elsewhere
Finally, we can add benchmark observations for five other settings: Poland 1578,
Mexico and Peru 1800, Australia 1870, and Cape Colony 1861. Most of these haveadditional limitations. The study of Poland in 1578, in which Mikoilaj Malinowski and Jan
Luiten van Zanden (forthcoming 2017) extrapolate from the Voivodship of Krakow, lacks a
Maddison estimate for comparison. So do the benchmark data from Peru around 1800.
For Mexico 1800 and Australia 1868, we can only compare staple food costs, without thebasic non-foods included in the other estimates. Still, these five scattered extra
observations do expand the summary testing.
G. Patterns in the disparities before 1914
This tour of some historical benchmarks for directly comparing countries’ realpurchasing power reveals some broad patterns. The first is a limited affirmation of
Maddison’s original guesses. As one would hope, his estimates are positively correlatedwith those presented here. On the other hand, we have found serious deviations from his
estimates when comparing other places to Britain. Among the more advanced countries in
the nineteenth century, the new departures from Maddison tend to revise his view in thesame direction as the earlier conjectures by Leandro Prados (2000) and the alternative
estimates of Marianne Ward and John Devereux (2003, 2006, 2016).
For 1914 and earlier, the revisions away from Maddison’s implied ratios werecaused by differences in concept and in basics of economic geography. As we saw in Table
3 and Figures 3-5, some rich countries’ purchasing powers were better, relative to
Britain’s, than Maddison implied. The countries favored by the new estimates are landabundant rich settler countries (USA and Australia) and Northern European countries(Belgium, Denmark, Germany, Norway, and Sweden). The countries disfavored relative to
Britain were mostly countries with lower real incomes by anybody’s measure (India, Italy,
and Japan). The exception was Switzerland’s new downward revision, which Ward andDevereux (2016) attribute to simple errors in the Swiss data used by Maddison. Countries
19for which the comparisons with Britain look much the same as in Maddison’s tables wereFrance and Netherlands, and perhaps China and Java.
H. And since 1914?
For the period since 1914, with its higher average incomes, expanded global trade,and better data, the world has changed greatly in ways that call for a different kind of
measure. The obsolete early-modern barebones bundle, dominated by grains, must be set
aside in favor of bundles involving less essential foods and housing rents, and these
updated bundles in turn must be compared with nominal incomes per capita.
For the early twentieth century, the bundle-pricing steps in this advance havealready been taken. In particular, Jeffrey Williamson (1995, appendices) has comparedfood and housing costs for nine countries in 1905-1914, and for seventeen countries in
1927. Gone are the nineteenth-century contrasts between the land-rich settler economies
and Britain. In the early twentieth century the United States, Canada, and Australia began
to have higher food costs for a given bundle than did Britain. On the other hand, theContinental European countries continued to have lower food and rent costs than
Britain.22
For the years since 1950, the data take the form of economy-wide prices, incomes,
and exchange rates, as developed by the International Comparisons Project (ICP) in the
famous Penn World Tables. The ICP became Angus Maddison’s base point. Again, his
procedure was to take the ICP detailed price and income comparisons for 1990, and backproject this international contrast back into history using the nations’ separate real GDP
accounts. As we have seen, this led his estimates to stray from what one would get fromdirect historical comparisons.
In fact, the index number difficulties caused by shifting product mixes are not just achallenge faced by economic historians. The same challenge faces non-so-historicaleconomists today, with their attempts to compare countries in the richer data
environment since 1950. Maddison, in choosing the long-span approach to illuminate
international differences in the deep past from a comparison of 1990 purchasing power
22 A remaining task will be to work out the comparisons of per-capita purchasing power

across the early twentieth century.

20

parities in “1990 international Geary-Khamis dollars”, was applying a technique that thePenn World Tables project used to derive the widely-used numbers for the world since1950. Just as Maddison fixed his historical backcasting to a very recent 1990 comparisonof prices and nominal incomes, so too the Penn World Tables have based comparisonsback to 1950 on the latest price comparisons, most recently the international pricecomparisons of 2005. Thus Maddison’s technique has reflected the state of the art among
economists. Yet the underlying problem of inconsistent historical comparisons has notgone away, either for the economic historians or for the larger economics community.
As it happens, the “new generation” of the Penn World Tables project, which has
now shifted to the University of California – Davis and to the University of Groningen, has
just launched an important reformulation of its data displays, partly in order to quantify
the biases that one gets from choosing the less appropriate comparison procedure.
Starting with Penn World Tables version 8.1, its organizers explain,[W]e distinguish whether real GDP is intended to measure the standard of living
across countries or to measure productive capacity…. [Furthermore,] to hold prices
constant over time, past versions of PWT relied upon real GDP growth from thenational accounts for each country. That is, the level of real GDP across countries
was constructed for the most recent ICP [International Comparisons Project, forcomparing prices] benchmark and then projected backwards and forwards in timeby using national accounts growth rates for each country. That approach meantthat past years of ICP data were discarded. In PWT 8 we likewise include a variable
that uses real GDP growth from the national accounts, but we further introduce
measures of real GDP that correct for changing prices over time and use ICP [price]benchmarks from multiple years. 23

23 Feenstra et al. 2015. Emphasis in the original. In terms of the terminology in the new-generation Penn World Table 8.1, the first sentence quoted here refers to the difference
between cgdpe and rgdpo, whereas the rest of the quoted passage refers to the difference
between rgdpe featured here and rgdpna (that’s na for “national accounts”), the type ofmeasure Maddison used, which followed the countries’ separate real national productindices over time.
The new generation of Penn World Tables emerged in the wake of an extensive
debate over the merits of the new international price comparisons for 2005, which
dramatically re-shuffled nations in terms of real GDP per capita. See Johnson et al. (2009),
Milanovic (2009), and Deaton and Heston (2010).
21

The shifts in price structure make a big difference, even within the half-century covered by
the Penn World Tables. From 1952 to the 2005 baseline, average living standards, using
the international price comparisons from multiple years, improved faster than
productivity growth in most countries. Among all 60 data-supplying countries, the two
measures differed by an average absolute gap of 23 percent in 1952, whereas they aredefined as equal in the base year 2005.24 So even over the last half-century or so, thegrowth of purchasing power, the direct historical comparisons featured in the Divergencedebates, has been quite different from the gaps implied by the growth rates of GDP per
capita, or relative productivity growth, using national accounts.25 It seems to follow thatmerely updating the base year, say from Maddison’s 1990 to 2011, fails to address thebasic problem: Price structures change, and so do shares of non-tradables in the economy,
and such shifts make the historically relevant direct comparisons yield different resultsfrom back projections.
IV. How did subsistence cost ratios relate to purchasing power ratios?
There is a striking pattern in the relative hard-currency costs of those subsistence
bundles used in the comparisons with Britain – a pattern that can be explained by
combining some theory and history. The relative bundle costs, graphed in Figure 6 andlisted in Table 4, showed a remarkably consistent pattern up to 1870, a pattern that wasthen washed away in the globalization wave of 1870-1914. From the early 1500s up
through about 1870, most other countries had lower bundle costs than did Britain, in
terms of silver or the gold-standard pound sterling. The only exceptions, with higher silver
costs of the subsistence bundle than in Britain, were Spain in the sixteenth andseventeenth centuries, and Italy in the sixteenth. In both exceptional cases a plausible
24 This 1952 measure refers to gaps between rgdpe and rgdpna.

25 In 1952, the first year of widespread data, Britain was near the bottom of the OECDranks in its relative purchasing power. To be more exact, of the usual 21 core OECD
industrialized countries, Britain ranked 16th in how much higher its purchasing power
proved to be in the direct comparison at 1952 prices than in a Maddison-type backprojection from the 2011 price structure. Only Germany, Italy, Greece, Ireland andNorway were less favored than Britain by using the 1952 data in a direct comparison.
22initial explanation was that they were initial recipients of New World silver, famously
raising the prices of basic goods in terms of silver. With those exceptions, the bundle costs
were lower in all data-supplying countries other than Britain – and then this pattern had
vanished between 1870 and 1914, as can be seen in Figure 6. Thus Adam Smith’s thinking
that the “cost of subsistence” was lower in China than in Europe can now be expanded:
Subsistence was cheaper in most of the Eastern Hemisphere than it was in Northwest
Europe.26 This remarkable prewar cost history needs to be explained.
Why would subsistence goods be cheaper in most other places than in Britain
before about 1870? And why would that pattern then be washed away? The answers lie
both in a changing historical reality and in a mechanism noticed by economists in the
postwar era. The changing historical reality is that goods essential to subsistence were
not traded goods before the mid-nineteenth century, and then became traded goods. Aslong as they were not traded over long distances, their prices reflected only their local
context. And as long as they were not traded over long distances, something called theBalassa-Samuelson effect made them cheaper in poorer countries than in richer countries
like Britain. Let us first turn to that postwar Balassa-Samuelson effect, and then return to
how the underlying realities changed its applicability before 1914.
The Balassa-Samuelson theory predicts that non-tradables are relatively cheaper incountries with lower overall labor productivity. A key (and realistic) assumption is that laboris mobile between the traded-goods and non-traded-goods sectors. Richer countries, with
their faster advances in productivity concentrated in the traded-good sectors, bid up thelabor wage rate. This draws labor from the non-traded sector, and raises relative costs andprices in this sector, where productivity is not going up. Result: In the richer country, prices
of non-traded goods go up relative to traded-good prices. In the poorer countries, where
productivity is more stagnant, non-traded goods can remain cheaper than in the richer
countries.

26 Adam Smith’s assertion that “rice in China is much cheaper than wheat is anywhere inEurope” was cited in Allen et al. (2011, pp. 22-23).

23

Postwar data support this prediction.27 The story rightly features differences in
sectoral productivities. The reason why non-tradables appear to be cheaper in poorer
countries than in richer countries, relative to traded goods, is that differences in capital
accumulation and technology have kept productivity lower in traded goods, relative to nontraded goods, in those poorer countries that missed out on industrialization.
For the pre-1870 era, the staple goods essential to subsistence were not traded
between continents, so they played the role of non-tradables in the Balassa-Samuelson model.
Indeed, in the earlier low-income settings, staples were a large share of the non-tradedsectors. Not surprisingly, the differential-productivity explanation for the BalassaSamuelson effect does fit the pre-1870 global pattern revealed in by the prices of staple
goods in Figure 6, with one noteworthy amendment. Although firm numbers are lacking,narrative histories suggest that high labor productivity and involvement in international
trade did indeed occur in the same leading sectors and the same leading countries, leading to
the relative-cost results in Figure 6.28
The one amendment relates to the Anglo-American contrast. Like the other countries
being compared with Britain in this paper, and like China as observed by Adam Smith and by
Allen et al (2011, p. 25), the American colonies and the United States had cheapersubsistence bundles than did Britain before 1870. The conventional interpretation of theBalassa-Samuelson effect says that this means that Industrial Revolution Britain had higher
relative productivity in export sectors. So far, that interpretation fits the results. Yet theamendment is that we still need to allow for the possibility that both sides had absolute
productivity advantages – the land-rich American economy in relatively non-traded staple
goods and Britain in traded manufactures. Absolute productivity advantages on both sides
would more easily fit the purchasing-power results we saw in Part II.
If thinking about relative sectoral productivities fits the pre-1870 relative cost pattern
so well, how is one to explain the disappearance of that relative cost pattern after 1870? Did
the labor productivities of tradable and non-tradable sectors converge all over the world?
27 For the theory itself, see Balassa (1964), Samuelson (1964, 1994), Feenstra et al. (2015).

An example of empirical confirmation on postwar data is Heston et al. (1994).

28 Implicit here is that traded-good prices tended to be equal when converted to a common

currency.

24

That seems less likely than a more straightforward explanation in terms of rising tradeshares. All across the nineteenth century, an increasing share of world product involved
international trade. While part of this trend reflects the rising productivity in the
manufacturing sector of Northwest Europe, part of it reflects the famous decline in longdistance trading costs across the second half of the nineteenth century.29
A reminder of this familiar pattern, and its relationship to the relative prices of thestaples in the barebones bundles, appears in Figure 7’s history of the price of wheat in
England relative to different American cities. Before the 1850s the English price was usuallymuch higher than in America, and the ratio between the two gyrated, as is common in
separate markets. True, both countries traded internationally in wheat, but separately on
the two sides of the Atlantic. Thus wheat, like other staple goods, was a non-tradable in thecontext of intercontinental trade before mid-century. After 1850, and after 1870 and theending of the US Civil War, British and American wheat prices clearly converged andstabilized. The more visible change here is not some convergence of sectoral productivities
around the world, but rather the switching of staple goods like wheat from having separate
continental markets to having an integrated market. This is one reason why the prices of thebarebones bundles in Figure 6 converged so visibly after about 1870.
V. Adding non-staple prices still leaves greater inequalities
It is time to address the suspicion that the new measures of purchasing power are
biased because they use a narrow set of staple-good prices to deflator all of nominal GDP.
Perhaps all of the departures from Maddison estimates are due to incomplete pricecoverage? Why not use a full GDP price deflator, including luxury consumer goods, capital
29 The global rise of trade’s share is noted in Maddison (1995, p. 38); Estevadeordal,

Frantz, and Taylor (2003); and Federico and Tena (2016, pp. 4-7, 32-34). The splitting of
its explanation between productivity growth and transport costs is documented by Jacks,
Meissner, and Novy (2010) and by Jacks and Pendukar (2010). The text is emphasizing thedeclining trade costs more than the global spread of productivity gains because thepresent focus is on the tradability of staple grains more than on the rise of trade in all
goods. On the earlier gradual convergence of Eurasian prices in non-subsistence goods,
see De Zwart (2016) and the sources cited there regarding eighteenth-century partial
globalization. On the eighteenth-century partial globalization of grain markets, see
Dobado-Gonzalez et al. (2012).
25

goods, government services, and exports? Such an extension has not been performed in
the past because of severe data constraints – yet we now have sufficient data on nonstaple goods’ prices to establish that using the narrow subsistence price deflator has
probably not overstated the true Eurasian gaps in purchasing power.
The daunting heterogeneity of luxury consumer goods and capital goods has been
the main barrier to comparing prices, or for that matter output volumes, over long reachesof time or space. Luxury consumer goods are heterogeneous by design, especially where
the goods are meant to convey superior status or ethnic distinctions, as in fashionwear
and the arts. Most capital goods have also eluded reliable price series. Scholars have tried,laudably but unpersuasively, to solve the problem of pricing capital goods with a few
input-price proxies, such as a mixture of wages plus iron bars. Such proxies could only bein proportion to the prices of the produced capital goods if productivity were fixed.30
Yet history has left us enough circumstantial evidence to suggest – broadly, forNorthwest Europe versus Asia from the sixteenth century through the nineteenth – thatthe true gaps in average purchasing power for all non-traded goods were no less than our
measures have shown using the narrow subsistence bundle costs. The main kind of
circumstantial evidence consists of a few price series for true luxury or investment goods,
ones of sufficiently uniform quality to yield comparable data across centuries and acrossoceans. Figures 8A and 8B show relative prices of a ream of paper, a kilogram of bar iron,and a medium-sized nail, all relative to the price of wheat, a subsistence good, and allindexed to a late-year base. By the sixteenth, paper (Figure 8A) had become cheaper inEngland, relative to wheat. From the sixteenth century to 1910, it remained cheaper – or,reciprocally, wheat remained more expensive – in England than in the scatteredobservations from China, India, Moscow, Warsaw, Sopron, or Peru. Only in Barcelona do
the data show cheaper paper (more expensive wheat). So if we accept that wheat prices
moved in step with the prices of the entire grain-dominated subsistence bundle, then theability to purchase paper was even more unequal across Eurasia than was the ability topurchase staple foods.
30 Collins and Williamson (2001, pp. 85-86) note this. They nonetheless conclude that evenin pre-war data, 1870-1913, the relative price of equipment is negatively correlated with
GDP per capita (2001, p. 75).
26

A similar contrast shows for the wheat prices of nails or of bar iron, in Figure 8B.
For the available years, nails were cheaper, relative to wheat, in England than in China,
India, Moscow, or Istanbul. Only for nineteenth-century Pennsylvania do we know they
were as cheap as in England. And in our one nineteenth-century benchmark for China,iron was also cheaper in England than in China. Philip Hoffman has found that guns werealso cheaper, per grain calorie, in England than in China in the 1620s (Hoffman 2011, p.
52). The implication, again, is that expanding the price deflator to include such non-staple
goods would show the English had at least as great an advantage in purchasing powerover their Asian contemporaries as we were able to see using the prices of subsistence
goods only. And the comparisons using subsistence-good prices only have already foundwider Eurasian gaps in purchasing power than Maddison suggested.
VI. A take-away menu
This paper’s introduction of new international comparisons of purchasing power,
from six continents and over about four hundred years, suggests four take-away
inferences for research and interpretation. The operative verb is “suggests,” not “shows,”
because the new estimates need scrutiny as well as extension to other settings. That is, toborrow a deft phrase recently used by Stephen Broadberry and his co-authors, it is hopedthat “... the results … while inviting refinement, are credible.”31
Three “take-aways” underline how the historical geography of purchasing power
may be expanded, and the fourth suggests an interpretation of the departures from the
Maddison estimates for the sixteenth through nineteenth centuries.
(1) The now-greater Eurasian Divergence. Now that the Eurasian contrasts suggest
a wider divergence back to about 1600 than the Maddison approach, further progress will
depend on quantification at the center of the Great Divergence debate: Imperial China.
Thus far the present direct-comparison approach is handicapped by insufficient Chinese
population data, income data, and prices other than the rice price.
(2) Frontiers, food-rich and otherwise. Given that the dramatic revisions regarding
North America relate to its cheapness of grains and other staple foods before the 1870s, it
31 Broadberry et al. (2015, p. 364), discussing their sectoral productivity estimates.

27

would be well to continue extending such direct comparisons to other early modern
frontiers, particularly grain-rich Thailand, Cochin China, and the Philippines in Asia and to
Poland, Russia, and Ukraine in Eastern Europe. There is a case for deeper probing of GDP
and prices in geographically varied Latin America and Africa. These frontiers differed intheir geography and relative scarcities.
(3) Luxury and capital-good prices. The history of purchasing-power inequalities,
both international and intra-national, is increasingly constrained by the lack of prices, orshadow prices, of luxury goods and capital goods. This research frontier, well introducedin the intra-national context by Hoffman et al. (2002), needs a renewed push.
(4) On revising Maddison
The main take-away, of course, is to confront the disparities between direct
historical comparisons and Maddison’s back projection. The pattern that stands out mostis that for Eurasian countries before 1870. For this group, direct historical comparisonssuggest greater gaps between a richer Northwest Europe and a poor Asia than Maddison
conjectured. The gaps appear wider in this paper’s use of staple-good price deflators, andwider still when one acknowledges that the omitted non-staple commodities were stillcheaper relative to staples in the rich Northwest.
What bias could Maddison have imparted? The possible bias that deserves
immediate consideration is a long-familiar one: The Gerschenkron (1947, 1951) effect,defined as the inevitable relevance of substitution in responses to changes in relative
prices. The OECD and World Bank define the Gerschenkron effect thus:“Gerschenkron effect. An effect applicable only to aggregation methods that use
either a reference price structure (i.e., each country’s quantities are valued by auniform set of prices) or a reference volume structure (i.e., each country’s prices
are used to value a uniform set of quantities) to compare countries. For methods
employing a reference price structure, a country’s share of total GDP (i.e., the total
for the group of countries being compared) will [seem to] rise as the reference
price structure becomes less characteristic of its own price structure. For methods
employing a reference volume structure, a country’s share of total GDP will [seemto] fall as the reference volume structure becomes less characteristic of its own
volume structure. The Gerschenkron effect arises because of the negative28

correlation between prices and volumes …. The Geary-Khamis and Iklé-DikhanovBalk methods are subject to this effect.”32
Which of these reference structures did Maddison use? The national sources heused to project real GDP back from 1990 to 1820 (Maddison 1992, Appendix B) varied inreference structure between prices, volumes, and value added, depending on which kindsof data were supplied by national sources. Maddison used these sources in a way that
included as much splicing of weights as possible, to capture the history of structuralchanges. No systematic bias is evident here (yet). However, there is the strong possibilityof a Gerschenkron effect in his base-year 1990 international comparisons in Geary-Khamis
prices. The weighting here clearly rests on a reference price structure, and one that is far
from (“less characteristic” of) the pre-1914 world. Furthermore, the poorer the country
being compared with Britain in, say, 1850, the farther still were its consumers from facing
the 1990s choices between different countries’ prices of Big Macs, pizza, home electricity,
and automobile use. Britain in 1850 was at least less distant from this 1990 world byvirtue of its higher incomes and Engel effects. Thus the Gerschenkron effect may havebiased upward his estimation of poor countries’ incomes in 1850 relative to his estimationof British incomes.
How would one adjust for such a Gerschenkron effect? The task of comparing
aggregates is never free from the index number problem. If one really wants to compare
purchasing powers in 1850 the way an observer should have seen them then, one could
replace the 1990 price comparisons with 1850 price comparisons. Even then, of course,
one would have to make an arbitrary choice. For Japan versus Britain, one can choose
Japanese weights, British weights, or Allen’s common hedonic price weights. Nonetheless,the preferred way to compare people’s fortunes in the past is to use direct comparisonsfrom exactly the historical settings they lived in – if our reconstructions of nominal
national product and prices from their time are sufficiently reliable. On the other hand,
the task of supplying and updating a global record of the growth of national product will
always be one for which the Maddison project will supply what the benchmark direct
32 http://siteresources.worldbank.org/ICPINT/Resources/270056-

1255977254560/6483625-1291755426408/7604122-1363984715044/27_Glossary.pdf.
Underlining added here.
29

comparisons, with their changing weights, cannot supply. Different questions call fordifferent approaches.

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34

Table 1. Comparing Consumer Purchasing Powers of Nominal GDP per Capita,
Japan versus Britain, 1750
The two consumer bundles, designed to have similar food calories, are:(A.) "Japan A" basket (Bassino and Ma 2005), with a liter of sake added, for special
occasions, yielding 1,942 daily calories and 82 grams of daily protein; and(B.) The British “bare bones” bundle (Broadberry et al., 2015), with sugar added, yielding
1,942 daily calories and 83 grams of daily protein.

barleyoats
buckwheatricesoybeansbeans/peas
meat
fish
sake
edible oilbuttersugar
linen
lamp oil

Units per person-year
units (A.) Japan(B.) Britain

Prices, in grams of silver (gAg)(A.) Japan(B.) Britain

kg
kg
kg
kg
kg
literskg
kg
litersliterskg
kg
mliters

0.18

10
0
16
113.6
52
4
0
3.5
1
1
0
0
5
2.6

0
166
0
0
0
21
5
0
0
0
3
2.1
5
2.6

0.29
0.54

0.61
0.36
0.36
0.22

3.02
0.34
0.34
3.10

2.18
0.46
1.35

6.89
5.88
6.64
10.79
3.17

1.17
1.35

The total bundle costs, and aggregate results for 1750 are:total cost of bundle (gAg)
real GDP, 1000 koku
nominal GDP, mill. £nominal GDP, million gAg
population, in millions
GDP / cap (gAg)
GDP / cap, in bundles(A.) Japan
90.4
86,905
4,654
30.9
150.6
1.666

(B.) Britain
208.2

Ratios
0.434

91.06
9,707
7.2
1,344.3
6.456

0.112
0.258

Sources and notes for Tables 1-2 and Figure 2: See notes to Table 3.

35

Table 2. Purchasing Power per Capita: Japan as Percent of Britain, 1600-1912
Maddison's
file 2010
1600 53.4
1650
1700 45.6
1713
1750
1800
1820 39.2
1850 29.1
1870 23.1
1880 24.8
1888 23.4
1900 26.3
1912 28.2

MaddisonThis paper's "bare-bones”
project 2016 purchasing power per capita
53.0
34.4 (1602)
60.4
42.1 (1648)
41.6
28.3
35.3
24.6
30.6
21.4
29.2
23.1
24.8
23.4
26.3
29.1

25.0
19.3
19.6
21.0

36

Table 3. Direct Comparisons of non-British with
British Purchasing Power per Capita, 1525-1912(Nominal GDP per capita, divided by cost of 1-man barebones bundle)(Note: Britain values are specific to the comparison bundles for each country.)
Japan vs. Britain
1602 1.7
4.6
1648 1.8
4.01713 1.6
5.3
1750 1.7
6.9
1800 2.0
8.81850 2.3
8.8
1870 2.5
12.5
1888 3.3
16.9
1912 4.3
20.6

Java vs. Britain
1820 3.8
8.6
1830 5.0
11.1
1840 3.4
9.8
1850 2.4
10.9
1870 2.3
12.8
1890 3.2
25.1
1910 2.2
26.1

China vs. Britain
1840 2.5
9.6
1885 1.4* 12.9

India vs. Britain
1595 1.3
5.0
1870 1.8
12.4

America vs. Britain
1700 10.0 7.3
1725 9.7
6.3
1750 9.8
6.6
1774 8.4
6.6
1800 6.5
7.1
1850 13.6 9.7
1860 14.5 9.7
1870 11.9 11.5

North-Central Italy vs. Britain
1525
5.7
5.8
1575
4.7
4.9
1625
3.9
4.3
1675
3.6
5.3
1725
4.5
7.0
1775
4.2
7.5
1820
4.7
8.4
1870
3.8
10.1
1910
7.5
19.4

France vs. Britain
1820 4.7
8.4
1870 6.6
10.1
1910 14.4 19.4

Netherlands vs.
1820
7.8
1870
7.7
1910
12.6

Poland vs. Britain
1578 2.9
4.2

Peru vs. Britain
1800 1.5**
8.8**

Mexico vs. Britain
1800 3.9** 10.9**

Australia vs. Britain
1870 8.3**
6.9**

Britain
8.4
10.1
19.4

Cape Colony vs. Britain
1861 1.37
9.45

37

Sources and notes for Table 3 and Figure 3:* See the text, noting the suspicion that Chang’s GNP estimate is too low.
** Food basket only
As of November 2016, underlying calculations will be detailed further in a new set
of files at gpih.ucdavis.edu.
Calorie and protein contents per metric unit are from Allen et al. (2011), Appendix
Table II, with a few exceptions. Unlike the studies (co-)authored by Bob Allen, this paperomits fuel from the bundles, due to uncertainties about the conversion of fuel inputs (e.g.
coal, firewood) into millions of BTU.
Britain: For Britain’s nominal domestic product and population, I have used
Broadberry et al. (2015) up through 1870, then splicing numbers from Mitchell (1988)
onto the Broadberry et al. base. Broadberry et al. are also the source for the British barebones consumer bundle. Britain = England before 1700, Great Britain for 1700-1870, thenUnited Kingdom. For British prices, the main source is Gregory Clark’s collection of English
price time series (gpih.ucdavis.edu). Where these series stop before 1914, the remaining
years were spliced from the London series of Federico and Tena (2016).
(1) Japan (Tables 3-4 and Figure 2): The estimates of Japanese national productand population relied at first on Bassino et al. (2015), then with a revised estimates
underlying Saito and Takashima (2016). I am indebted to Masanori Takashima for therevised GDP figures in millions of koku, 1600-1874.
Their estimates of real national product draw on a wide range of clues about
sectoral value added, productivity, urbanization, demand patterns, and other indicators.
Their real value added estimates are all converted into rice (koku) equivalents, implicitly
using relative prices in a base period. I have converted their resulting real products into
nominal product in grams of silver, using the price of rice in Masahiro Kimura (1987),
Mitsui Bunko (1989), and the file "Japan 1885-1926," downloadable fromhttp://gpih.ucdavis.edu. I am indebted to Jean-Pascal Bassino for supplying the Mitsui
Bunko series, and to David Jacks for supplying the 1886-1926 file, to gpih.ucdavis.edu.
These sources are also used for the Osaka prices in 1600-1604 (“1602” here), Kyoto prices
for 1711-1715 (“1713”) through 1866-1874 (“1870”), and Edo prices for 1886-1914.
There are uncertainties about the silver content of prices expressed in monme, as
the sources note. My estimate of the silver content of the monme comes from the Bank ofJapan's research center (http://www.imes.boj.or.jp/cm/english_htmls/feature_gra19.htm (1 August 2006)). The assumed rates are: for the 1600-1690's, 3 grams of silver permonme; for 1690's–1706, 1.875 grams of silver per monme; and for 1713-1870, 0.75
grams of silver per monme.
The Japanese consumer bundle is the “Japan A” basket of Bassino and Ma (2005),
with slight adjustments.
On rice production and overall GDP, with comparisons to Maddison, see also Fukao
et al. (2015, Appendix A).
(2) China 1840 and 1885:(3) India 1595 and 1870: The Mughal GDP in millions of rupees for 1595 is from
Moosvi 2008, pp. 2-3. For the population, I use Broadberry et al. (2015, p. 70). Habib's(1982a, p. 166) estimate of 107-115 million is based on 1941 census shares of British
India, which seems risky. The 1870 GDP is from Goldsmith (1983).

38

The prices and consumer bundles are from the Allen and Studer data set at
gpih.ucdavis.edu.
Silver content of rupee prices: The silver value of the rupee is set by Allen andStuder at 10.78 grams of silver in the current estimates. For alternative exchange rates of
the rupee from 1823 on, see the Excel file "Indian rupee exchange rate values, 1823-1899,at http://gpih.ucdavis.edu. The choice of silver content does not affect any relative real
wages, of course, though it threatens to affect relative prices and relative real GDP per
capita if the exchange rates are inconsistent.
Broadberry and Gupta (2012) used 8.0 rupees per £ for circa 1600. This implies
14.62 gAg per rupee. They cite Chaudhuri (1978, p. 471), who gives that Rs 8.0 per £ foryears from 1760 on. Habib (3rd ed, 2014, p. 433) says that "The weights of the [silver]
rupee and the [gold] muhr remained practically unchanged through our period [15561707]." So Rs 8 = £1 even in 1595. Using the Broadberry-Gupta rate for 1600 thus would
raise all silver prices, and income, in India 1595-1600 by more than a third (36.26%).
(4) The American estimates of real purchasing power per capita: As in Table 1, thesource is Lindert and Williamson (2016, Chapters 2, 5, and 10).
(5) – (7) Continental Western Europe 1525-1910: Nominal GDP figures are
centered nine-year averages, except that Italy 1910 = that one year's value.
On North-Central Italy, 1525-1910, see Paolo Malanima (2010) and his (2012)“Consumer Price Indices and Wages in Central-Northern Italy and Southern England,
1300-1850: Statistical Appendix.”
http://www.paolomalanima.it/default_file/Italian%20Economy/StatisticalAppendix.pdf,
accessed 21jan2016. Also available at gpih.ucdavis.edu, Nominal GDP Historical Series.
On France and Netherlands, 1820-1910, the nominal GDPs are available, withsource citations, at gpih.ucdavis.edu. The bare-bones consumer basket costs for Paris andAmsterdam are from Robert Allen’s (2001, p. 426) half-century averages, 1500-1549
through 1850-1899, and 1900-1913
Exchange rates up to mid-19th-century are based on the silver contents of the national
currencies. Exchange rates for the 1870 and 1910 benchmarks are from Federico Giovanniand Antonio Tena-Junguito, (2016), "World trade, 1800-1938: a new data-set" WP 93.
Web reference http://www.ehes.org/working_papers.html. I am indebted to Chris
Meissner for this reference.
(8) Poland, 1578: All the estimates in this case are from a single secondary source.
Malinowski and Van Zanden (forthcoming, p. 28) have estimated Poland’s nominal income,its subsistence basket cost for an average “individual” (adult income recipient?), and theratio of these in both Poland and Britain for 1578. Their comparison is with England, notGreat Britain. The comparison is not graphed in Figure 3 for lack of any competing
Maddison estimate for sixteenth-century Poland.
(9) Peru, 1800: Nominal GDP was estimated by Seminario (2013 book ms., pp.
536-37) as 48,385,750 pesos fuertes of 1795. I have inflated this to an average for 17961804 of 51,424,823 pesos fuertes, or 1.247 million grams of silver, using his price ind3xfrom the same pages. The population of 1,268,848 is from also from Seminario, p. 278.
The prices are from the gpih data file underlying Arroyo Abad, Davies, and Van Zanden(2012).
(10) Mexico 1800: Nominal GDP for 1800 is from Coatsworth (1978, 1989).

39

Population from Seminario (2013 book ms., p. 278). The exchange rate of 24.248 gAg perpeso, or 3.031 gAg per real, is from the gpih data file underlying Arroyo Abad, Davies, and
Van Zanden (2012). For Mexico, I have switched from the Arroyo-Davies-Van Zanden useof 165 kilos of maize to a wheat-maize mix that conserved the 1,943 calories while
utilizing the availability of the wheat price series.
Maddison (2001) gives a Mexico/UK ratio of 0.447 for real GDP per capita.
(11) Australia 1868: All figures other than population are averages over 18661870. Nominal GDP is from Butlin (1962, Table 2, p. 10/11). The interpolated populationfor 1868 is 1.495 million, from the Palgrave International Historical Statistics series.
The Maddison Project estimated ratio of real GDP per capita, 1866-1879 = 1.0148, versus
the 1.205 ratio implied here.
(12) Cape Colony 1861: British nominal GDP and both places’ bundle costs are
based on five-year averages for 1859-1863. The British nominal GDP’s are, again, thosefor Great Britain, based on Broadberry et al. (2015). The Cape GDP and population arethose given for 1861 by Grayling and Verhoef (2015, Tables 2 and 3). The Cape Colony
prices and the consumer bundle are those supplied in the Pim de Zwart data series on
Cape Colony prices 1653-1913, at gpih.ucdavis.edu. The Cape/Britain ratio of purchasing
powers per capita, equaling 0.133 for 1861, contrasts with the 0.247 ratio for the same
five-year period (1859-1863) by the Maddison Project.

Table 4. How relative subsistence costs correlated with purchasing power, 1925-1912
Each country’s level as a share of British level
Comparison Benchmark
country
year
China
FranceFrance
India
India
Japan
Japan
Japan
Japan
Japan
Japan
Java
Java
Java

Subsistence Maddison
This paper’s
bundleProject
purchasing
cost ratio
income/cap power / capita

Eurasia up to 1870 -1840
0.60
1820
0.84
1870
1.10
1595
0.43
1870
0.53
1602
0.54
1648
0.63
1713
0.69
1750
0.44
1800
0.29
1850
0.42
1820
0.38
1830
0.31
1840
0.36

0.27
0.58
0.62
0.73
0.17
0.53
0.60
0.40
0.35
0.31
0.29
0.26
0.24
0.23

0.26
0.56
0.66
0.26
0.15
0.37
0.44
0.29
0.24
0.23
0.26
0.44
0.45
0.35
40

Java
Java
NC Ital y
NC Italy
NC Italy
NC Italy
NC Italy
NC Italy
NC Italy
NC Italy
Netherlands
Netherlands

1850
1870
1525
1575
1625
1675
1725
1775
1820
1870
1820
1870

0.53
0.49
1.47
1.32
1.04
0.80
0.71
0.72
0.65
0.98
0.65
0.88

0.19
0.16
1.40
1.33
1.38
1.21
0.94
0.80
0.72
0.47
0.90
0.85

0.22
0.18
0.99
0.95
0.90
0.69
0.64
0.56
0.56
0.38
0.93
0.76

Outer continents up to 1870 -Australia
1868
1.13
Cape Colony 1861
1.45
Mexico
1800
1.04
USA
1725
0.72
USA
1772/4
0.76
USA
1800
0.70
USA
1850
0.82
USA
1860
0.77
USA
1870
1.08

1.03
0.25
0.40
0.53
0.68
0.62
0.79
0.79
0.77

1.21
0.15
0.36
1.55
1.27
0.92
1.41
1.50
1.03

After 1870 -China
1885
France
1910
Japan
1888
Japan
1912
Java
1890
Java
1910
NC Italy
1910
Netherlands 1910
USA
1900
USA
1912

0.14
0.68
0.23
0.29
0.14
0.14
0.46
0.80
0.91
1.09

0.11
0.74
0.20
0.21
0.13
0.08
0.39
0.65
1.31
1.18

0.59
1.12
0.93
1.56
0.68
0.71
1.07
0.89
0.83
1.08

Notes to Table 4:
The price and purchasing power results are derived as described in the notes to Table 3
and Figure 3. The preferred source for the Maddison Project income per capita is its
internet site (Bolt and Van Zanden 2013), explained in Bolt and Van Zander (2014).
Three observations from Table 3 were omitted here. Peru 1800 and USA 1750
were omitted for lack of any Maddison Project estimates. Japan 1870, at the dawn of the
Meiji restoration, was omitted because its new currency units gave questionable results,
as evident in Figure 6.

41

42

Figure 1. American Real Income per Capita, Relative to Britain, 1700-2011
Direct Current-Price comparisons versus Maddison Back-projections

Sources and notes to Figure 1:* The 1700 estimate is from Maddison (2001), rather that from the Maddison Project site.
The sources are Maddison (1995, 2001, 2010); Maddison Project site (2013); Ward andDevereux (2003, 2004, 2006); and Lindert and Williamson (2016). For 1700-1872 theLindert-Williamson series combines our own new estimates of nominal incomes with
Robert Allen’s barebones consumer price deflators for Philadelphia, Massachusetts, andthe Chesapeake, along with his corresponding price series for England, and theBroadberry et al. (2015) estimates of the nominal income of Great Britain up to 1870. For
1950-2010 we use the expenditure-based income measure (cgdpe) per capita from Penn
World Tables 8.1, and our ratios refer to the United Kingdom, not Great Britain.
The sources and assumptions for Figure 1 are described at length in Lindert andWilliamson (2016, Chapters 2, 3, 5, 6, and 10 and Appendix D).

43

Figure 2. The Bare-bones Purchasing Power of GDP per capita,
Asian Countries Compared with Britain, 1595-1912

44

Figure 3. Comparing Current-Price Measures of Relative Purchasing Power per Capita
with Maddison’s GDP per capita, Several Countries Relative to Britain, 1525 – 191245

Figure 4. Comparing Current-Price Measures of Relative Purchasing Power per Capita
with Maddison’s GDP per capita, Several Countries Relative to Britain, 1872 and 1910
(Based on Ward-Devereux 2016.)

46

Figure 5. Comparing Current-Price Measures of Relative Purchasing Power per Capita
with Maddison’s GDP per capita, Several Countries Relative to Britain, 1872 and 1910
(Based on Ward-Devereux 2016. For each country, the upper dot refers to 1910.)

47

Figure 6. Relative Costs of Barebones Consumer Bundles in Hard Currency, 1525-1912(Costs relative to Britain = 1.000)

Sources and notes to Figure 6:
The sources are the same as those described in the notes to Table 3 and Figure 3.
The compositions of the bundles vary from one country’s time series to another’s, though
all bundles’ foods deliver about 1,942 kilocalories.
Hard currency here means either grams of silver or the pound sterling, both for Britain
and for the indicated other country.

48

Figure 7. English / American Price Ratios for Wheat, 1786-1936

49

Figures 8. The Wheat Price of Lesser Luxuries, 1215-1912
Figure 8A. The Wheat Price of Paper, England and Elsewhere, 1355-1912

50

Figure 8B. The Wheat Price of Nails and Iron, England and Elsewhere, 1220-1912

51

Sources and notes to Figure 7:
The English price series are from Clark in gpih.ucdavis.edu, with values for 1914-1938
spliced on from the series given in Federico and Tena (2016).
The American price series are from Carter et al. (2006, series Cc205-Cc209. For 1881-90
the "Chicago" series is spliced onto the 1890-1913 Chicago "Spring and winter" series.
For 1914-38 the BLS series is spliced onto the Chicago spring and winter series.
The exchange rate is from Federico and Tena (2016).
The prices are centered five-year averages.
Sources and notes to Figures 8A and 8B:
The English series are from the corresponding files in gpih.ucdavis.edu, with a few
exceptions. The figures comparing China with England in 1840 are from Broadberry, Guan,
and Li (2016, Table 3).
The figures are generally quinquennial averages centered on the stated years, indexed tothe base of England, 1910-14 (except for indexing nail prices to 1866-1870). Those forEngland are from Clark’s 1209-1914 price file at gpih.ucdavis.edu, converted to logarithms.
Those for other places are ratios of the log form ln (Other place / England), with theEngland denominator not necessarily coming from the Clark series.
The index 100-base years are the end-years of the series, namely 1910 for paper and ironand 1870 for nails.
These log-ratios of departure from the England price ratio in the same benchmark year
are, as follows:
Figure 8A, paper: Arequipa (Peru), year 1600 = 1.62, 1650 = 1.94, and 1700 = 1.74.
Barcelona, 1500 = -0.97, 1550 = -1.19, 1600 = -0.62, 1700 = -0.75, 1750 = -0.70, and 1790
= -0.56. Sopron, Hungary, 1550 = 0.60, 1600 = 1.21, 1650 = 0.98, 1700 = 0.95, 1750 = 0.67.
Warsaw, 1650 = 1.81, 1700 = 1.08, 1750 = 0.72, and 1790 = 0.94. Moscow, 1600 = 1.47,
1650 = 2.00, 1700 = 0.84, 1750 = 1.51, and 1790 = 1.19. Canton 1700 = 2.32. Pune, India
1820 = 0.72.
The Clark-based English wheat price indices for paper, to which these log-departures areadded, are England 1500 = 0.90, 1550 = 0.54, 1600 = -0.25, 1650 = -0.22, 1700 = 0.42,
1750 = 0.48, 1790 = 0.00, and 1820 = 0.31 (all in logs).
Figure 8B, ln (other country/GB) for nails: Castile (average of New and Old), 1500 = -0.85,1550 = -0.16, 1600 = 0.18, and 1650 = 0.66. Istanbul, 1600 = 0.16, 1700 = 0.97, 1750 =
0.34, and 1790 = 0.60. Moscow, 1600 = 2.22, 1650 = 1.43, 1700 = 0.87, 1750 = 0.22, and1790 = 0.82. Canton 1700 = 2.36. Pune, India 1819 (1817-21 average), for British mediumsized nails, from Divekar (1989).
The Pennsylvania nail price series (PA) is from the file "Pennsylvania 1720-1896, spliced"
at gpih.ucdavis.edu.
It is based on the data supplied by Anne Bezanson and collaborators.

52

The Clark-based English wheat price indices for nails (based in 1866-70, and logged), towhich these log-departures are added, are 1500 = 2.27, 1550 = 1.58, 1600 = 0.86, 1650 =
0.59, 1700 = 0.58, 1750 = 0.60, 1790 = 0.27, 1820 = 0.06, and 1840 = 0.18.
Figure 7B, ln (other country/GB) for manufactured iron shapes: Canton 1840 = 2.36. Pune,
India 1819 = 0.74.
The Clark-based English wheat price indices for manufactured iron (based in 1906-1910,
and logged), to which these log-departures are added, are 1820 = -0.13 and 1840 = -0.22.
In figure 7B, the wheat price of iron is not graphed for Pune, India 1819, because it is too
close to the relative wheat price of nails for the same date.

53