Monthly Archives: February 2018

Measuring Benefits from Energy Transitions

Consumer Surplus from Energy Transitions 

by Roger Fouquet (Grantham Research Institute on Climate Change and the Environment at LSE)

Abstract: Energy transitions have led to major advances in human wellbeing. However, little evidence exists about the scale of the net benefits. By developing a new method for identifying the demand curve, and by using a unique, historical data set, this paper estimates the consumer surplus associated with heating, transport and lighting over more than two hundred years and identifies the gains from a number of key energy transitions. For certain energy transitions, the increase was dramatic, reflecting the transformations in society and lifestyles that mobility and illumination provided in the nineteenth and twentieth centuries. Yet, the net benefits related to heating technologies only rose modestly. Finally, due to saturation effects of the demand for energy services, future technological developments and energy transitions may benefit consumers (though not necessarily society as a whole) less than those in the past.

URL: https://EconPapers.repec.org/RePEc:lsg:lsgwps:wp277

Circulated by NEP-HIS on 2017‒10‒22

Review by: Cristián Ducoing (Lund University)

 

Energy Transition

Summary

The current research focus in energy transitions is mainly motivated by the environmental implications of energy consumption. This more than justified direction has relegated to a second place the analysis of the enormous benefits derived from energy transitions, specially when we observe consumers’ welfare.  This new paper by Roger Fouquet analyses the positive impacts of energy transitions (hereafter, ET) by looking into how each ET generates consumer surplus.

roger_fouquet

Roger Fouquet

This paper combines data sets from two previous works of the author about the United Kingdom on service prices between 1300 and 2010 (Fouquet 2011a), and service consumption between 1700 and 2010 (Fouquet 2014). The data sources and methodologies used were explained in Fouquet (2008). In brief, Fouquet has done an upgrade of his former estimations to measure how much welfare we have obtained by ET. The author follows a standard measure of welfare (how less consumers pay for a specific service) and he applies it to each ET during the last two centuries in the United Kingdom.

income_price_elasticity

Figure 1: Income Price Elasticity of Demand for Energy Services in the United Kingdom, 1800 – 2008

As shown in the examples in Figure 1, a key advantage of focusing on energy services, rather than on fuels (energy carriers), is that the demand for services remains comparable with the introduction of new goods and technologies. 

Figure3

Figure 2: Consumer Expenditure on Domestic Heating, Passenger Transport and Lighting as a share of GDP in the United Kingdom, 1800 – 2010

The conclusions extracted from the paper could be summarized as follows:

  1. Attempts to estimate consumer surplus face enormous challenges, mainly by the effects of disruptive technologies. However, it could be possible to get an approximation taking into account the methodology used by Nordhaus (1997). Moreover, the paper presents a novel method that allows to identify the changes in demand curves for energy services (lightning, heating and transport).
  2. There were dramatic increases in consumer surplus due to energy transition in transport (stagecoaches to railways) and lightning (candles to gaslight and to electric lightning).
  3. Developing countries are benefited by increasing energy consumption. On the other hand, benefits in developed countries could be lower than in the past.
  4. The method offered allow us to forecast the long-run net benefits of new energy technologies and transitions. This issue has enormous policy implications in relation with the environmental challenges that we are facing us.

Comment

Currently, to defend energy systems/consumption as mechanisms of progress and development is quite complicated, specially if the energy systems contain fossil fuels, such as the main energy carriers in the case of the United Kingdom. This paper focuses its attention on the “good side” of energy consumption and mechanization, tackling a compulsory debate on the trade-off between economic development and sustainability. Roger Fouquet has mentioned this debate in an 2016 article, where he analyzed the lessons from history to our current energy transition. Now, Fouquet has demonstrated, accounting for the consumer surplus, than previous energy transitions have been beneficial for consumers/population. The question is: how should the current and  future energy transition be carried? In order to achieve economic development, countries pursuing higher income levels require an increase in energy consumption.  Fossil fuels still are a valid option to increase energy consumption; a low carbon economy could be farther in the road than we thought. A challenge to global society is to create an economic environment favorable to clean energy technologies, in order to promote economic growth in low income regions without the deprivation of our natural resources and environment.    

As this paper has shown us, there are periods when the increase in energy consumption has been beneficial to aggregate welfare, at least from a country/region perspective. However, the current global situation doesn’t allow an increase in energy consumption based in fossil fuels without risking main environmental equilibriums.

The only possible criticism to the paper is the implicit “normative” scope supported by one country experience. Nevertheless, Fouquet presented this paper as a starting point for further research.

References

Fouquet, R. (2011a) “Divergences in Long Run Trends in the Prices of Energy and Energy Services.” Review of Environmental Economics and Policy 5(2) 196-218.

Fouquet, R. (2014) “Long Run Demand for Energy Services: Income and Price Elasticities over 200 Years.” Review of Environmental Economics and Policy 8(2) 186-207.

Fouquet, R. (2008) Heat Power and Light: Revolutions in Energy Services. Cheltenham: Edward Elgar.

Advertisements

The Professional Historian in the Era of Globalization

Who is Lying on the Procrustean Bed?: Current Historians of the World, Denationalize Ourselves!

By: Naoki Odanaka (Tohoku University)

Abstract: This paper aims to analyze and evaluate the arguments presented in the Writing the Nation series (hereinafter WtN), targeting particularly its Vol. 2 entitled Setting the Standard (hereinafter StS). In a globalized world, do we historians still need to talk about national history, that is, the practice of writing the history of nations or should we not instead seek to produce historical works suitable for the globalized world, including global histories?

URL: https://econpapers.repec.org/paper/tohdssraa/53.htm

Distributed by NEP-HIS on 2017-04-09

Review by: Stefano Tijerina (University of Maine)

Naoki Odanaka argues that the present era of globalization demands that the historian abandons its state-centered focus and instead begins to construct history from a global perspective in order to use history as an instrument to understand how we reached the current political, economic, political, and cultural dynamics. His argument departs from the conclusions of the Writing the Nation series, and more particular volume 2 of that series, where a consensus among almost 100 historians was reached that a refocus of the study of history was necessary in order to adapt to current realities.[1] Odanaka asks whether the current focus on “national history” is relevant or if historians should instead “produce historical works suitable for the globalized world;” in other words, should they instead engage in the production of global histories? [2] Odanaka does not discard the relevance of national history but instead suggests we move toward a global analytical approach that connects and provides a more holistic understanding of developments such as free trade, multilateralism, the emergence of trading blocks, geopolitical transformations, movements of people and commodities, and technology.

National histories, suggests Odanaka, continue to serve their purpose of nation building.[3] They are important tools for the construction of national identity; they “legitimize the existence” of the nation-state.[4] From his perspective, there is no denial that the nation-state continues to be relevant, and in some regions the concept “has grown stronger,” but globalization has inevitably impacted the political, economic, social, cultural, and environmental development of each nation.[5] The dynamics of globalization have “destabilized” the lives of private, public and social actors, forcing them to “cling” to their national identities as they become challenged by the flow of goods, ideas and people, and it has been the role of the traditional historian to keep the construct of the nation-state alive in spite of the changing dynamics.[6] Odanaka highlights the flow of immigrants from the Middle East to Europe and the impact that this has had on the nation-state narrative, forcing the co-existence between the global and the national interpretations of history.[7]

The author’s Euro-centric focus impedes him from moving beyond the North-South dynamics of globalization. A more holistic analysis of South-South and North-North dynamics would have strengthened his argument, since the legitimization of the nation-state is challenged by transformative historical realities within the global North and the global South as in the case of Venezuelan-Colombian relations or British and European Union relations that may only be explained through transnational global history.

Naoki Odanaka does agree that current realities may not be explained through the cohesively confined borders of the nation-state, because doing so leads to “methodological nationalism.”[8] There is no exclusivity anymore; borders have become very porous and in some instance they have completely disappeared as in the case of commercial trade under the North American Free Trade Agreement (NAFTA) or as in the case of global human and narcotics trafficking.

Therefore, says Odanaka, historians need to center their research strategy on “other frameworks of historical research.”[9] He suggests new approaches such as non-spatial focuses or “non-national spatial identities.”[10] His critical views of the nation-state approach impede him however from considering other spatial dimensions of historical analysis that, although relying on the nation-state, only incorporate the nation-state as one of many transnational actors within the more holistic analysis. For example the labor history of oil that forces the historian to see not only labor as a transnational issue, but corporations, management culture, institutional frameworks, technology, commercialization, transportation, marketing, and consumption as well.

Noaki Odanaka concludes by saying that the professionalization of the historian depends on the traditional notion of the nation-state as the central focus of historical narrative. There is a notion that there cannot be a historian without the nation-state, thus the state-centered focus of the local and international institutions that promote and justify the profession and science of history. From the beginning, the methodology became state-centered, thus his argument about the prevalence of “methodological nationalism” and the need to change this culture from within the profession.[11] Odanaka therefore suggests that a shift away from nation-state dependency demands institutional changes as well as a revision of the science’s methodology.

History may no longer be used as an instrument for the justification and preservation of the nation-state. Odanaka would agree that global and transnational approaches to the study of history may serve as an instrument to help societies look at themselves in the mirror, leading them to question traditional views by breaking the barriers of imaginary borderlands that currently impede the public from seeing the historical interconnectivity that has always existed between humans, commodities, ideas, cultures, and physical environments. History may serve as an instrument to break down the status quo, debunking the sovereignty of the nation-state, a reality that is already visible under the new dynamics of globalization. This might mean that historians may cease to exist as agents of the nation-state and instead serve as agents of humanity.[12]

Odanaka recommends that professional historians self-reflect on their responsibility to humanity.[13] This is challenging, particularly for historians in the Global North who are writing and researching from a position of privilege as well as for those historians in the Global South clinging to fragile institutional and nation-state structures that are quickly being dismantled by the market forces of globalization. Odanaka reminds historians to reflect on the current political, economic, social, cultural, technological, and environmental realities in which they are living.[14] He reminds historians that their job is to connect the past with the present in order to decipher and explain contemporary realities, constantly aware of identity and spatial constructs that limit our scope as researchers.[15]

[1] For more information see volume 2 Setting the Standard; Ilaria Porciani and Jo Tollebeek, eds., “Setting the Standard,” in Writing the Nation series, ed. Stefan Berger, Christoph Conrad, and Guy Marchal (Basingstoke: Pelgrave Macmillan, 2012)

[2] Naoki Odanaka, “Who is Lying on the Procrustean Bed?: Current Historians of the World, Denationalize Ourselves!” (paper, review forum for the Writing the Nation Series, Sogan University, Seoul, Korea, April 22, 2016), 1.

[3] Ibid., 1.

[4] Ibid.

[5] Ibid., 2.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid., 5.

[12] Odanaka points out the case of local historians in France and Germany as well as Japanese historians that went against the status quo in order to illustrate alternatives to traditional nationalist approaches to history. Ibid., 5-6.

[13] Ibid., 8.

[14] Ibid.

[15] Ibid., 9.

Black Living Standards in South Africa before Democracy

Black Living Standards in South Africa before Democracy: New Evidence From Heights

By: Bokang Mpeta (Stellenbosch University), Johan Fourie (Stellenbosch University) and Kris Inwood (University of Guelph)

Abstract: Very little income or wage data was systematically recorded on the living standards of South Africa’s black majority during much of the twentieth century. This paper uses four data sets to document, for the first time, an alternative measure of living standards: the stature of black South Africans over the course of the twentieth century. We find evidence to suggest that the first three decades of the century were particularly bad, perhaps due to the increasingly repressive labour policies in urban areas and famine and land expropriation that weighted especially heavily on the Basotho. The decade following South Africa’s departure from the gold standard, a higher international gold price and the demand for manufactured goods from South Africa due to the Second World War seem to have benefited both black and white South Africans. The data also allow us to disaggregate by ethnicity within the black population group, revealing levels of inequality within race group that has been neglected in the literature. Finally, we compare black and white living standards, revealing the large and widening levels of inequality that characterised twentieth-century South Africa.

URL: https://econpapers.repec.org/paper/rzawpaper/670.htm

Distributed by NEP-HIS on: 2017-10-15

Review by: Gregori Galofré-Vilà (University of Bocconi and University of Oxford)

Almost forty years ago, a group of historians led by Robert Fogel began to explore the potential of anthropometric measurements for answering a range of historical questions, largely, but not limited to, those concerning health and wellbeing (Fogel et al. 1978). Although around 80% of the main variation in individual height may be genetic, it has long been recognised that variations in the mean heights of different groups of people owe much to economic, social, and environmental circumstances.

Since the early efforts of Robert Fogel, anthropometric data contributed to long-standing debates such as the health of slaves in the US South (Steckel 1977) and the living standards during the British Industrial Revolution (Floud et al. 1990). Meanwhile many historians began to explore the development of height in many countries. For instance, Komlos (1985) began the collection of data for the Habsburg Empire, Martínez-Carrión (1986) for Spain and Sandberg and Steckel (1987) for Sweden, just to name a few. For a recent review of the height literature see Galofré-Vilà (2018).

Perhaps, the most interesting discovery until now, as commented by Floud et al. in The Changing Body (2011) and Deaton in The Great Escape (2016), is that since the 1850s, or over the course of some 6-7 generations, heights in Europe and North America have progressed into previously uncharted territories. For instance, Dutch men, being today the tallest in the world, grew from 166.5 to 182.7 (or 1.2 cm per decade). Better diets, sanitary reforms, lower frequency of sickness and shorter workdays are also reflected in terms of longevity, and during the same period Dutch life expectancy grew from 36.6 to 77.8 (or 2.8 years per decade).

However, in less wealthy parts of the world these improvements have been less important –if we can talk in terms of improvements at all. For instance, Guntupalli (2007) showed that Indian heights increased from 163.2 cm to 165.1 cm between the 1910s and 1980s (or 0.3 cm per decade) and Moradi et al. (2013) found that heights in Ashanti (Ghana) increased from 167.7 cm to 168.8 cm (or 0.6 cm per decade). Indeed, today life expectancy in developing countries is clearly below Western standards (in 2014 life expectancy in India was 68 years and 61 in Ghana).

In a very interesting paper, Bokang Mpeta, Johan Fourie and Kris Inwood (2017) take advantage of height records to chart, for the first time, the living standards of black South Africans between the 1890s and the 1990s. They addressed three questions: (1) Were poor black living standards a result of apartheid-era polices, or did they worsen even before South Africa’s most infamous era? (2) When did white and black living standards diverge? and (3) Can we explain the level and trend within the black population over the twentieth century? As the authors point out, the height data here are especially helpful as data on more conventional or modern indicators are lacking.

Similar to the less wealthy parts of the world, they found that the height of black South Africans improved little across the twentieth century (1.3 cm between 1895 and 1985 or 0.1 cm per decade). Indeed, as Figure 1 shows, they discovered that between the 1890s and 1910s heights declined from nearly 168 cm to 167 cm and linked this decline to the white repression and regulations of land expropriation (for instance, the 1913 Native Land Act was particularly painful as it banned the ownership of land by the black population). They also stressed some negative effects of extractive institutions following the discovery of diamonds in Kimberly in 1867 and gold mines in Johannesburg in 1886.

Figure 1: Height development of black South Africans between 1895 and 1990. Source: Mpeta, Fourie, Inwood (2017).

Yet, it seems that a reversal occurred when South Africa left the Gold Standard (in December 1932) and, due to the increases in the international price of gold, the prospects of employment for black people rapidly improved, with heights increasing from 167 cm to 168 cm during the 1930s and 1940s. Feinstein (2005) also observed that the Second World War created a powerful stimulus to local industries and gold mining, creating opportunities for many to sell goods abroad. However, this short-lived period of improvement somewhat slowed down after the 1950s, reaching 168.5 cm in the 1970s and followed the electoral victory of the National Party in 1948. The apartheid and new institutional reforms such as the 1959 Promotion of Black Self-Government Act (which among other things abolished parliamentary representation for Blacks) seem also to have worsened black living standards.

There are also additional interesting features of the paper. Black males born towards the end of apartheid were nearly 7 cm shorter than white males. However, this might not be surprising because, as the authors explain, infant mortality in the Cape Colony was two times higher for black Africans and the wages paid to white miners were almost eight times higher than those paid to black miners. They also find differences in height by nearly 2 cm between black ethnicities.

As seen in Figure 1 above, in order to have sufficient data to cover a century, the authors use four separate sets of data. First, the heights of men who joined the South African Army between 1940 and 1945 (and born between 1890 and 1922). Second, the heights derived from dead bodies deposited in regional hospitals of South Africa that were unclaimed (with birth years estimated between 1897 and 1980). Finally, the height data compiled in two modern health surveys: the 1998 South African Demographic and Health Survey (DHS) and the 2008 National Income Dynamics Study (NIDS). As the authors point out at different points in the paper, all these sources potentially carry different issues of selection and representativeness. For instance, there is almost no information on who these 500 dead men were and whose bodies were unclaimed. Indeed, this is a rather limited dataset with, on average, 6 men for each birth year. Meanwhile, medical surveys such as the DHS are based on men who were in a household at the time of the interview and married to a woman aged 15-49 (with single men neglected from the survey). Indeed, the differences between these two overlapping surveys after 1960 are rather curious.

The first sample, the military one, is perhaps the most controversial in light of recent papers from Bodenhorn, Guinnane and Mroz (2017) about sample selection bias. In a nutshell, these authors highlight the idea that height records coming from voluntary armies can be a biased sample of the underlying population because varying conditions of the economy and trade brought forward, at different times, recruits from different social classes. Mpeta, Fourie and Inwood (2017) seem rather confident that sample selection is not a concern here because heights and wages moved together and unemployment was rather low in the 1940s. Yet, Bodenhorn et al.’s argument requires the data to have been derived from men who were recruited over a relatively long period of time and Mpeta et al.’s black time-trends between 1895 and 1920 are derived from a shorter period of recruitment (1940-1945). Here, it would be interesting to know more about differences in economic conditions within that short-period of rapid economic growth and social change.

Indeed, the decline in black living standards seen between 1895 and 1920 is not universally accepted. For instance, in Why Nations Fail, Acemoglu and Robinson (2012) observe that “the development of the mining economy and the expansion of European settlement had other implications for the development of the area. Most notably, they generated demand for food and other agricultural products and created new economic opportunities for native Africans both in agriculture and trade”; at least, as the authors explain, until 1913 with the Native Land Act. The decline in stature found between the 1890s and 1910s might also be explained by the composition of age in the sample. Whenever we seek to derive time-trends from samples of army recruits who were recruited over relatively short periods of time, the time-trends appear to show a decline. This raises a question about the extent to which men who join the army at older ages are as representative of their birth cohorts as men who join at younger ages.
Despite these and other comments, and the limitation of data to pursue further econometric analysis, for now, we should be really grateful to the authors for charting a new African country in the height literature and for providing new material to ponder.

Acknowledgements

I thank María Gómez-León and Bernard Harris for valuable comments on a first draft of the column.

List of references

Acemoglu, D., J. Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business.

Bodenhorn, H., T. W. Guinnane, and T. A. Mroz, “Sample-Selection Biases and the Industrialization Puzzle,” Journal of Economic History, 77(1), 171-207.

Deaton, A. 2013. The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton University Press.

Feinstein, C.H. 2005. An Economic History of South Africa. Conquest, Discrimination and Development. Cambridge University Press.

Floud, R., K. W. Wachter, and A. Gregory. 1990. Height, Health and History: Nutritional Status in the United Kingdom, 1750-1980 (Cambridge University Press).

Floud, R., R. W. Fogel, B. Harris, and S. C. Hong. 2011. The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700. Cambridge University Press.

Fogel, R. W., S. Engerman, J. Trussell, R. Floud, and C. L. Pope. 1978. “The Economics of Mortality in North America, 1650-1910: A Description of a Research Project,” Historical Methods 11:2, 75-108.

Galofré-Vilà, G. 2018. “Growth and Maturity: A Quantitative Systematic Review and Network Analysis in Anthropometric History,” Economics and Human Biology 28, 107-118.

Guntupalli, A. M. 2007, Anthropometric Evidence of Indian Welfare and Inequality in the 20th century, Doctoral diss., Tübingen University.

Komlos, J. 1985. “Stature and Nutrition in the Habsburg Monarchy: The Standard of Living and Economic Development in the Eighteenth century,” The American Historical Review 90:5, 1149-1161.

Martínez-Carrión, J. M. 1986. “Estatura, nutrición y nivel de vida en Murcia, 1860-1930,” Revista de Historia Económica – Journal of Iberian and Latin American Economic History 4:1, 67-97.

Moradi, A., Austin, G., Baten, J. 2013. “Heights and Development in a Cash‐Crop Colony: Living Standards in Ghana, 1870‐1980,” unpublished manuscript.

Mpeta, B., Fourie, J., and Inwood, K. 2017. “Black Living Standards in South Africa before Democracy: New Evidence from Heights,” Stellenbosch Economic Working Papers 10/2017.

Sandberg, L. G., and R. H. Steckel. 1987. “Heights and Economic History: the Swedish case,” Annals of Human Biology 14:2, 101-110.

Steckel, R. H. 1977. The Economics of U.S. Slave and Southern White Fertility. Doctoral diss., University of Chicago.