1.3, History\'s hockey stick, income growth PDF

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Annika Johnson and Christian Speilmann...

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Economics 1, Unit 1.3 Growth rates - Another way to look at the GDP per capita is by using ratio scales, ratio scales are used to compare growth rates - Ratio scales: show GDP per capita doubling as you move up the y-axis - Growth rate is the same as measuring the rate of change Growth Rate=

Change ∈ income Original level of income

E.g. if the level of GDP per capita in the year 2000 is $21,046 and then in 2001 $21,567 we can then calculate growth rate GR=

y 2001− y 2000 y 2000

GR=

21,567−21,046 =2.5 % 21,046

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Finding growth rates as percentages makes it easier to compare the levels of GDP per capita at different times in history To compare growth rates from different time periods a ratio scale must be used, when a ratio scale is used a series that grows at a constant rate begins to look like a straight line (because percentage/proportional growth rate is constant) The steeper line in a ratio scale means that there is a faster growth rate

Living standards - Living standards didn’t grow in any sustained way for a very long time - And when it did occur it occurred at different times in different countries, leading to vast differences in living standards from country to country...