Latest Situation in the Misery Index
The misery index was first introduced by Arthur Okun as an indicator consisting of the unemployment rate plus the inflation rate. The rise in unemployment indicates that the number of people without income increases, and the rise in inflation indicates that life becomes more expensive. Over time, the index was reformulated by Robert Barro and Steve Hanke. In its reformulated form, it is possible to express the index with the following equation: Misery Index = (Inflation Rate + Unemployment Rate + Interest Rate) – Growth Rate Ten-year government bond rates are taken as the interest rate here. If the growth rate is positive, that is, if the economy has grown, this rate needs to be decreased, because economic growth reduces misery. On the contrary, if the growth rate is negative, that is, if the economy has shrunk, then this rate should be added to the total, because negative growth brings an increase in misery. The table below presents the development of the poverty inde...
