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

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Jonathan Hersh
Joachim Voth ()

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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.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1163.

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Date of creation: Jul 2009
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Handle: RePEc:upf:upfgen:1163

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Related research
Keywords: Economics of New Goods; Age of Discovery; Consumption; Early Modern Europe; Living Standards;

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D60 - Microeconomics - - Welfare Economics - - - General
F10 - International Economics - - Trade - - - General
N33 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - Europe: Pre-1913

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