Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492

Hans-Joachim Voth and Jonathan Hersh

No 7386, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.

Keywords: Age of discoveries; First divergence; New goods; Standard of living indicators; Unified growth (search for similar items in EconPapers)
JEL-codes: D12 F19 N14 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-his
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Citations: View citations in EconPapers (37)

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Working Paper: Sweet diversity: Colonial goods and the rise of European living standards after 1492 (2011)
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