Economics at your fingertips  

Information Theory to Assess Relations Between Energy and Structure of the U.S. Economy Over Time

Carey W. King ()
Additional contact information
Carey W. King: The University of Texas at Austin

Biophysical Economics and Resource Quality, 2016, vol. 1, issue 2, 1-33

Abstract: Abstract This paper describes the changing structure of the United States’ (U.S.) domestic economy by applying information theory-based metrics to the U.S. input–output (I–O) tables from 1947 to 2012. Here the I–O tables are an economic network where the sectors are the nodes. The value of these metrics is that they describe the balance or trade-off between efficiency and redundancy of network flows as well as equality and hierarchy of flows through nodes in a network. I relate these metrics to the U.S. gross power consumption and annual intermediate spending by the food and energy sectors, the latter being a proxy for the inverse of the net power ratio (or net energy) of the economy, to test hypotheses of energy–economy structural linkages. The results of this paper show that increasing gross power consumption, as well as a decreasing share of intermediate expenditures of the food and energy sectors, correlates with increased distribution of money among economic sectors, and vice versa. The information theory metrics indicate two time periods at which major structural shifts occurred. The first was between 1967 and 1972, and the second was around the turn of the twenty-first century when food and energy expenditures no longer continued to decrease after 2002. In response to the latter, it is clear that the U.S. economy did trade off structural reserves (e.g., decreasing metrics of conditional entropy, redundancy, and equality) for structural efficiency (e.g., increasing metrics of efficiency, mutual constraint, and hierarchy) after food and energy expenditures increased post-2002. I also test the structural trends with increasingly simpler (e.g., fewer sectors) representations of the I–O tables, and the results are more consistent for I–O representations that account for inputs and outputs (e.g., value added and gross domestic product) rather than only the intermediate transactions among sectors. The findings of this paper have important implications for economic modeling in at least two ways. First, the paper helps explain how fundamental shifts in resources costs relate to economic structure and economic growth. Second, the paper shows that the number of sectors used to represent economic transactions influences the systemic metrics themselves.

Keywords: Energy; Food; Economics; Information theory; Networks; Efficiency; Hierarchy; Equality; Redundancy; Biophysical; Complexity (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s41247-016-0011-y

Access Statistics for this article

Biophysical Economics and Resource Quality is currently edited by C.A.S. Hall and U. Bardi

More articles in Biophysical Economics and Resource Quality from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-05-12
Handle: RePEc:spr:bioerq:v:1:y:2016:i:2:d:10.1007_s41247-016-0011-y