Improved Estimates of Using Luminosity as a Proxy for Economic Statistics: New Results and Estimates of Precision
Previous work has analyzed whether luminosity data contain useful information for estimating economic output and concluded that there was signiﬁcant promise for regions with poor quality economic statistics. The present paper examines alternative measures of the precision of the estimates using bootstrap and prior estimates of the errors for both the luminosity quality and the national accounts quality. Based on the new results, we conclude: First, for countries with high quality systems, there is no reason to use luminosity data as a supplement to standard data in any context where standard data are available. Second, we ﬁnd that there is no advantage at present of using lights data for time-series corrections for any purposes where standard data are available. Third, for countries with low quality statistical systems, the estimates suggest that there may be substantial information in the luminosity data for cross-sectional estimates of output. Fourth, the major concerns about the use of lights as a proxy involve uncertainties about the precision of standard national accounts data. Finally, we recommend that future work be concentrated on integrating luminosity data into the cross sectional estimates of national and regional output primarily for countries with poor quality statistical systems.
Nordhaus, William D. and Chen, Xi, "Improved Estimates of Using Luminosity as a Proxy for Economic Statistics: New Results and Estimates of Precision" (2012). Cowles Foundation Discussion Papers. 2217.