Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492

SSRN Electronic Journal 01/2009; DOI: 10.2139/ssrn.1402322
Source: RePEc


Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.

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    • "It was shown that during the pre-modern centuries, while Italy and Spain experienced stagnation and even declines (Malanima, 2011; Álvarez-Nogal and De La Escosura, 2013), the per capita GDP of England doubled between 1270 and 1700, and that of the Netherlands almost tripled between 1000 and 1500. Researchers questioned when sustained growth actually started (Hersh and Voth, 2009; Persson, 2010; Fouquet, 2014), but except Wu et al. (2014), none asked whether the Malthusian trap existed or not. The take-home message of most of the research is that living standards fluctuation was much larger than previously thought—the findings disturb Malthusian theory but not the Malthusian fact of long-term stagnation. "
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