But new analytical techniques and observational satellites may soon open a more rigorous frontier for measuring economic activity from space. Brown University economists J. Vernon Henderson and David Weil, along with their graduate student Adam Storeygard, recently released an analysis of a decade’s worth of global night-light data from DMSP. Their research shows a link between changes in a country’s gross domestic product and the intensity of its electric lighting: On average, as a country’s GDP increases, its nighttime light emission becomes more intense. The work is particularly promising for measuring growth in the developing world, where the quality of collected economic data is notoriously poor.
“A lot of activity in these developing countries is in the untaxed, off-the-books informal sector, but very little information is gathered about it,” Henderson says. “So when [statistical agencies] estimate total economic activity, they don’t really know the size of that sector even though it may account for a majority of the employment in the country. When you get another metric to compare the numbers to, you can be shocked by how much they are off.”
Henderson cites the Democratic Republic of Congo as an example of where data quality is poor. According to the Penn World Table, a standard source used to measure economic growth across countries, during the period from 1992 to 2003 the country had negative GDP growth. In that same period, the satellite data shows a marked increase in nighttime light intensity, suggestive of positive growth, likely in the informal sector. Henderson says Myanmar’s numbers, on the other hand, may show political manipulation: Nocturnal lights indicate significantly lower GDP growth than that stated by the ruling military junta.
Henderson and his colleagues also used the DMSP data to examine economic activity on sub-national scales, investigating the relationship of African cities to nearby agricultural regions. They found that years of crop-boosting high rainfall in a city’s hinterlands significantly correlated with increased growth and development in the urban center as measured by artificial lighting intensity.
“There’s a lot of literature assuming hinterlands aren’t relevant to urban growth and development, but that’s not really the case,” Henderson says. “Farmers demand a bunch of products, they demand services, they demand inputs into agricultural production—this makes a lot of difference to a nearby city. In some sense it’s an academic debate, but this really is a fundamental matter of development and policymaking that can change people’s lives.”
Of course, there are dangers in using nighttime lights as an indicator for economic growth.