Data on GDP per capita is notably sparse for periods before 1800, with even fewer data points available prior to 1300. For instance, Chinese GDP estimates are only available for the years 1000, 1090, and 1120. Consequently, the visual representation of these historical living standards is created by connecting these limited data points with straight lines, which means year-to-year fluctuations cannot be observed.

Pre-1800 GDP Data Scarcity and Visualization Limitations

Figure 1.1a illustrates GDP per capita, a metric for average annual income, used to compare living standards across various nations. In this figure, the height of each line represents an estimate of average living standards at the specific date indicated on the horizontal axis. Gross Domestic Product (GDP) signifies the total value of goods and services produced within a specific timeframe. The graph highlights significant wealth disparities. By 2018, for instance, the average person in Japan was six times wealthier than their counterpart in India. Japanese wealth in 2018 was comparable to that in Britain, a similarity also observed in the fourteenth century. Furthermore, Americans were wealthier than the Japanese, and Norwegians held the highest average wealth among the groups depicted. The data for this graph, spanning over a millennium, is primarily sourced from the extensive work of Angus Maddison, who devoted his career to uncovering the limited historical data necessary for meaningful comparisons of living standards across more than a thousand years. His efforts, continued by the Maddison Project, along with contributions from Stephen Broadberry and other researchers, form the basis of these estimates. This comprehensive data, including that for Figure 1.1, also draws on the studies of numerous statisticians, historians, computer scientists, and economists. It is important to note that this historical data is continually being refined, and the most up-to-date information for Figure 1.1 now includes six countries. Additionally, an interactive chart offers an alternative data source for a wider array of nations. For further exploration of GDP per capita data across various countries, users can visit Our World in Data’s dedicated webpage on the topic. While income disparities were minimal a thousand years ago, they are now substantial globally.

History’s Hockey Stick: GDP Per Capita in Six Countries (1000–2018) and Data Sources

The 'history's hockey stick' pattern, which illustrates rapid economic growth, does not manifest uniformly across all nations. Its shape and the timing of its 'kink' (the point of accelerated growth) differ significantly from one country to another.

Cross-Country Variability of the Hockey Stick Pattern

In Britain, the 'hockey-stick' growth curve exhibits a less abrupt upward turn, with significant economic expansion commencing around 1650.

Britain's Hockey-Stick Growth Timeline

Japan's economic growth, as depicted by the 'hockey stick' pattern, shows a more pronounced and sudden upward shift, which occurred around 1870.

Japan's Distinct Kink in 1870

When comparing GDP per capita levels and growth rates across countries and different time periods, two types of scales are used. One scale facilitates the comparison of GDP levels, while the other, a ratio scale, allows for comparing growth rates. On a ratio scale, a series with a constant growth rate appears as a straight line, and a steeper line indicates a faster growth rate. For instance, if GDP per capita doubles or quadruples over 100 years, the ratio scale will show different slopes, reflecting the difference in growth rates.

Comparing GDP Levels and Growth Rates:

Capitalism, causation, and history's hockey stick are concepts that intertwine to examine the relationship between economic systems and the exponential growth in living standards and technology. Capitalism, as an economic system, encourages competition, innovation, and specialization, which have been linked to the upward surge of the so-called "hockey stick" in historical development. This term represents the sudden increase in wealth and technological advancements over the past few centuries, transforming societies and the world as we know it. While it's essential to approach the idea of causation with skepticism, one cannot deny that capitalism has played a significant role in shaping the trajectory of human progress and the exponential growth depicted by the hockey stick of history.

Capitalism, causation and history’s hockey stick

The significant economic acceleration, or 'kink' in the hockey stick pattern, for China and India occurred much later than in Western Europe, specifically in the latter half of the twentieth century.

Late Economic Takeoff in China and India

The term 'Growth rate of income ' refers to the pace at which income, population, or any other variable changes over time : 
$$
growth rate= change In Income /Original Level Of Income
$$

Growth rate of income 

Statistician Hans Rosling created an engaging video that visually illustrates the historical trajectory of economic prosperity and health advancements across various nations, emphasizing how certain countries achieved substantial progress considerably earlier than others.

Hans Rosling's Video on Disparate Global Economic and Health Development

During the period when Western European countries began experiencing significant economic growth, living standards in China and India, contrary to the global trend, saw a decline.

Decline of Living Standards in China and India During Western European Economic Takeoff

This node represents Figure 1.1, a graph titled 'History’s Hockey Stick,' which illustrates gross domestic product per capita from 1000 to 2018. It's noted that ongoing data refinements mean the most current historical data for Figure 1.1 now encompasses six countries. The accompanying image visually presents this data, serving as a prime illustration of the 'hockey stick' growth pattern in economic history. Furthermore, an interactive chart offers an alternative data source for a wider range of countries, facilitating broader comparisons.

History’s Hockey Stick Graph (Figure 1.1)

Despite the global trend of economic growth depicted by the 'hockey stick' pattern, some countries have not yet experienced the upward turn in their living standards, indicating a lack of sustained economic development.

Countries Without Tipped Hockey Stick Growth

Since the late twentieth century, 'latecomer' economies, notably including India and China, have demonstrated significant economic acceleration, catching up with richer nations. The ratio scale highlights that countries like Japan and China have experienced higher recent growth rates compared to many other regions, contributing to this global convergence in living standards.

Recent Economic Catch-up of Latecomer Economies (e.g., India, China, Japan)

The 'history's hockey stick' pattern illustrates a period of sudden and rapid growth in income levels, largely attributed to the rise of capitalism. For a significant portion of history, prior to the Industrial Revolution, income levels remained relatively stagnant, showing no sustained growth. This changed with the emergence of capitalism and new technologies, which spurred unprecedented economic expansion, leading to the characteristic hockey stick-shaped growth trajectory. While capitalism fostered innovation, wealth creation, and improved living standards, it also brought challenges such as wealth concentration, inequality, and environmental degradation, prompting ongoing discussions about its overall impact on social progress.

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A hockey stick is visually characterized by a shaft that is predominantly straight, culminating in a distinct, sharp upward curve at its end.

Visual Characteristics of a Hockey Stick

Since 1900, the Earth's average temperatures have been rising due to increased concentrations of greenhouse gases. This increase is primarily caused by carbon dioxide (CO2) emissions that result from the large-scale human consumption of fossil fuels like coal, oil, and natural gas.

Fossil Fuel Combustion as a Driver of Modern Global Warming

To cite The Economy, we suggest combining the referencing style for an ebook and treating each unit as a chapter, for instance (using Harvard style): Bowles, S., Carlin, W. and Stevens, M. (2017). ‘Property and power: Mutual gains and conflicts’. Unit 5 in The CORE team, The Economy. Available at: https://www.core-econ.org. [Accessed on (date)].

https://www.core-econ.org/the-economy/v1/book/text/0-3-contents.html

CORE Econ - The Economy 1.0

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

History’s Hockey Stick: Stagnant Income Before Sustained Growth

The 'hockey stick' pattern describes a trend where a variable remains relatively stable or unchanged for an extended period, followed by a sudden and dramatic increase. This pattern is observed in environmental data, such as the historical trends of atmospheric carbon dioxide (CO2) levels and average global temperatures, particularly in the northern hemisphere. These environmental indicators showed little change for many centuries before experiencing sharp rises in the twentieth and twenty-first centuries, mirroring the shape of a hockey stick.

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