It is often said that a picture is worth a thousand words. The value of a picture taken from space is a new metric we can use to measure economic growth and activity.
The past decade has seen a dramatic increase in economists’ use of satellite images of the earth at night. These “night lights”, as they are called, help study a wide variety of topics, ranging from growth and development to poverty and inequality, particularly in places where economic data are scarce and unreliable. Night lights reveal both the remote corners of our world in new detail and how they change over time.
As we show in our chart of the week, based on research, strong economic performance in the past three decades has made Asia much brighter at night.
The value of a picture taken from space is a new metric we can use to measure economic growth and activity.
For example, China and India’s sustained growth has been lighting up the night sky. Millions of people have been lifted out of poverty beneath the glittering lights. However, the pace of development is not the same everywhere and some places remain in the dark. Notably, North Korea remains shrouded between China’s thriving northeast and booming South Korea.
The data on night lights is useful because it is posted online frequently and it is highly correlated with economic activity. Night lights make it possible to track changes in, for example, conflict-ridden economies over time, gauge economic shifts at subnational levels, and even re-estimate GDP of economies with a large informal sector.
They are particularly useful for illuminating our understanding of low- and middle-income countries where official data are often incomplete. For example, comparison of night lights before and after the impact of wars or natural disasters often reveal their devastating and unequal impact within countries, which is not often reflected in aggregate data such as national accounts. A recent example of this is Mozambique before and after the cyclone Idai this year.
As fleeting as they are, night lights are the footprints countries leave in space. The vast amount of data embedded in night lights has already yielded great insights into our economic activity and behavior. And all this marks only the beginning of the era of big data. There are countless other satellite imagery data economists are tapping into, and indeed we are entering a new age of discovery, this time from space.
