Study: Sears catalog data suggests U.S. growth was faster than previously measured
7 reported
A new working paper from MIT researchers uses 5.1 million product listings from Sears catalogs spanning 1900 to 1990 to construct a quality-adjusted price index for U.S. consumer goods. The authors, Verónica Bäcker-Peral and Benjamin Wittenbrink, employed large language models to extract product information and estimate hedonic price schedules from text embeddings. Their resulting cost-of-living index implies substantially lower goods inflation than conventional deflators, and consequently much faster real economic growth. According to the paper, real goods consumption grew by a factor of 39 between 1900 and 1990 using their index, compared with a factor of 10.3 using standard goods deflators. The gap between their index and canonical ones is largest before World War II, reversing the conventional view that goods consumption growth was slower before 1945 than in the post-war decades. The paper was highlighted in a tweet storm, and the source notes it is important work.
What’s reported
The paper was written by Verónica Bäcker-Peral and Benjamin Wittenbrink of MIT.
It uses 5.1 million product listings from Sears catalogs, 1900–1990.
Large language models were used to extract product information and estimate hedonic price schedules.
The resulting cost-of-living index implies substantially lower goods inflation than conventional deflators.
Real goods consumption grew by a factor of 39 using the new index, versus 10.3 using standard goods deflators.
The gap between the new index and canonical ones is largest before World War II.
This reverses the conventional view that goods consumption growth was slower before 1945 than after.
Key figures
Verónica Bäcker-Peral, MIT researcher
Benjamin Wittenbrink, MIT researcher
Sources: marginalrevolution.com
