Friday, December 31, 2021

Misery Index (and Pain Index)

The Misery Index hasn’t been talked about much since the 1970s when unemployment was really high and inflation was double digit. The argument is that high unemployment is painful, and high inflation is painful, so when you add the two together you get a good measure of the misery throughout the economy. Both presidents Ford and Carter had average Misery indexes of 16, but Carter when out of office in 1980 leaving a Misery Index of almost 20 to Ronald Reagan.

Pain Index

Wikipedia does a great job of organizing information and trends related to Misery Index by country over time. The article presents 2013 as an example year, just a couple years out of the worldwide Great Recession of 2007-2008. Several countries had Misery Indexes of 60 or more (Venezuela, 79.4 and Iran, 61.6).  The US had a Misery Index of 11 in 2013, predominantly because of persistently higher unemployment, inflation was below 2%.) High inflation, or even hyperinflation, is usually associated with an unstable economy.  In 2019, Venezuela had a Miser Index that was basically unmeasurable because of inflation that was 1000% or far higher.