Misery index (economics)

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

Misery index by US presidential administration + Index = Unemployment rate + Inflation rate (lower number is better)President Time Period Average Low High Start End Change Harry Truman 1948–1952 7.88 03.45 – Dec 1952 13.63 – Jan 1948 13.63 3.45 -10.18 Dwight D. Eisenhower 1953–1960 9.26 02.97 – Jul 1953 10.98 – Apr 1958 3.28 9.96 +5.68 John F. Kennedy 1961–1963 7.14 06.40 – Jul 1962 08.38 – Jul 1961 8.31 6.82 -1.49 Lyndon B. Johnson 1963–1968 6.77 05.70 – Nov 1965 08.19 – Jul 1968 7.02 8.12 +1.10 Richard Nixon 1969–1974 10.57 07.80 – Jan 1969 17.01 – Jul 1974 7.80 17.01 +9.21 Gerald Ford 1974–1976 16.00 12.66 – Dec 1976 19.90 – Jan 1975 16.36 12.66 -3.70 Jimmy Carter 1977–1980 16.26 12.60 – Apr 1978 21.98 – Jun 1980 12.72 19.72 +7.00 Ronald Reagan 1981–1988 12.19 07.70 – Dec 1986 19.33 – Jan 1981 19.33 9.72 -9.61 George H. W. Bush 1989–1992 10.68 09.64 – Sep 1989 14.47 – Nov 1990 10.07 10.30 +0.23 Bill Clinton 1993–2000 7.80 05.74 – Apr 1998 10.56 – Jan 1993 10.56 7.29 -3.27 George W. Bush 2001–2008 8.11 05.71 – Oct 2006 11.47 – Aug 2008 7.93 7.39 -0.54 Barack Obama 2009–2016 8.83 05.06 – Sep 2015 12.87 – Sep 2011 7.83 6.77 -1.06 Donald Trump 2017–2020 6.91 05.21 – Sep 2019 15.03 – Apr 2020 7.30 8.06 +0.76 Joe Biden 2021– January 2025 10.16 06.79 – Feb 2024 11.29 – Jun 2021 7.70 7 -0.7

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

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

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

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

Hanke's Misery Index

+ Ranked from worst to best Country/Territory 2020 2022 3827.6 330.8 547.0 414.7 N/A 225.4 N/A 116.2 N/A 86.8 N/A 31.5 193.9 176.1 177.1 190.337 145.3 80.5 105.7 60.3 95.0 156.192 92.1 73.3 60.6 93.518 60.4 63.6 53.4 61.785 49.3 83.492 48.9 95.4 47.1 40.977 45.6 47.2 42.7 63.1 42.4 51.6 42.2 34.835 41.6 32 41.2 176.1 41.2 101.601 40.7 55.7 40.5 62.4 40.3 61.5 39.7 64.023 39.5 42.3 39.3 62.3 39.1 26.32 38.6 41 37.9 63.5 37.9 56.3 36.8 38.9 36.7 30.296 36.7 33.7 36.2 52.653 36.1 46.905 36.1 61 35.8 42.2 35.8 22.58 35.7 19.21 35.4 44.531 35.4 42.98 34.8 52.5 34.1 44.4 34.0 27.2 33.5 110.003 33.1 24.603 32.7 50.2 32.5 52.6 32.4 37.077 32.0 43.7 31.5 21.98 31.3 31.128 30.4 29.884 30.2 41.2 29.9 26.3 29.9 18.9 29.5 43.854 29.3 26.3 28.7 41 28.3 19.552 28.2 38.131 28.2 28.16 28.1 50.4 27.8 27.4 38.64 27.1 31.8 26.2 37.1 26.2 50.4 26.0 28.4 25.8 36.9 25.7 18.725 25.6 20.3 24.3 99.634 23.9 36.846 23.8 25.6 23.8 75.9 23.5 21.525 23.3 17.5 23.2 17.5 23.2 45.4 22.8 36.565 22.2 22.441 22.0 39.2 22.0 26.451 21.6 11.3 22.5 17.659 20.9 41.832 20.9 21.727 20.8 29.264 20.4 18.3 20.3 8.6 20.1 18 19.9 33.202 19.9 37.18 18.5 32.271 18.4 41.138 18.4 19.935 18.3 25.5 18.2 18.191 18.1 20.676 18.0 11.062 18.0 18.615 17.6 35.235 17.5 32.7 17.1 34.692 17.1 35.49 17.0 19.919 16.7 16.882 16.4 52.9 16.3 20.6 16.2 32.051 16.0 24.6 16.0 52.16 15.9 20.059 15.9 26.3 15.8 102 15.7 22.2 15.5 19 15.4 20.608 14.8 40.242 14.6 15.986 14.5 17.063 14.5 32.87 14.5 9.075 14.4 17.2 14.4 12.384 14.3 18.316 14.0 20.107 13.9 33.761 13.4 14.839 13.2 22.2 13.2 35.4 13.0 14.973 12.9 8.602 12.8 21.629 12.8 13.542 12.7 29.198 12.6 10.219 11.8 15.785 11.8 13 11.6 25.132 11.6 23.34 11.4 88.1 10.9 16.381 10.8 11.622 10.6 69.192 10.5 9.77 9.5 10.95 8.6 8.518 8.3 12.515 8.3 13.1 8.1 9.071 5.3 13.591 3.8 9.399 −3.3

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

Misery and crime Some economists, such as Hooi Hooi Lean, posit that the components of the Misery Index drive the crime rate to a degree. Using data from 1960 to 2005, they have found that the Misery Index and the crime rate correlate strongly and that the Misery Index seems to lead the crime rate by a year or so. In fact, the correlation is so strong that the two can be said to be cointegrated, and stronger than correlation with either the unemployment rate or inflation rate alone.

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

Misery index (economics)

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