Puzzling properties of the historical growth rate of income per capita explained

📝 Abstract

Galor discovered many mysteries of the growth process. He lists them in his Unified Growth Theory and wonders how they can be explained. Close inspection of his mysteries reveals that they are of his own creation. They do not exist. He created them by his habitually distorted presentation of data. One of his self-created mysteries is the mystery of the alleged sudden spurt in the growth rate of income per capita. This sudden spurt never happened. In order to understand the growth rate of income per capita, its mathematical properties are now explored and explained. The explanation is illustrated using the historical world economic growth. Galor also wonders about the sudden spurt in the growth rate of population. We show that this sudden spurt was also created by the distorted presentation of data. The mechanism of the historical economic growth and of the growth of human population is yet to be explained but it would be unproductive to try to explain the non-existing and self-created mysteries of the growth process described in the scientifically unacceptable Unified Growth Theory. However, the problem is much deeper than just the examination of this theory. Demographic Growth Theory is based on the incorrect but deeply entrenched postulates developed by accretion over many years and now generally accepted in the economic and demographic research, postulates revolving around the concept of Malthusian stagnation and around a transition from stagnation to growth. The study presented here and earlier similar publications show that these postulates need to be replaced by interpretations based on the mathematical analysis of data and on the correct understanding of hyperbolic distributions.

💡 Analysis

Galor discovered many mysteries of the growth process. He lists them in his Unified Growth Theory and wonders how they can be explained. Close inspection of his mysteries reveals that they are of his own creation. They do not exist. He created them by his habitually distorted presentation of data. One of his self-created mysteries is the mystery of the alleged sudden spurt in the growth rate of income per capita. This sudden spurt never happened. In order to understand the growth rate of income per capita, its mathematical properties are now explored and explained. The explanation is illustrated using the historical world economic growth. Galor also wonders about the sudden spurt in the growth rate of population. We show that this sudden spurt was also created by the distorted presentation of data. The mechanism of the historical economic growth and of the growth of human population is yet to be explained but it would be unproductive to try to explain the non-existing and self-created mysteries of the growth process described in the scientifically unacceptable Unified Growth Theory. However, the problem is much deeper than just the examination of this theory. Demographic Growth Theory is based on the incorrect but deeply entrenched postulates developed by accretion over many years and now generally accepted in the economic and demographic research, postulates revolving around the concept of Malthusian stagnation and around a transition from stagnation to growth. The study presented here and earlier similar publications show that these postulates need to be replaced by interpretations based on the mathematical analysis of data and on the correct understanding of hyperbolic distributions.

📄 Content

Puzzling properties of the historical growth rate of income per capita explained

Ron W Nielsen1 Griffith University, Environmental Futures Research Institute, Gold Coast Campus, Australia

Abstract. Galor discovered many mysteries of the growth process. He lists them in his Unified Growth Theory and wonders how they can be explained. Close inspection of his mysteries reveals that they are of his own creation. They do not exist. He created them by his habitually distorted presentation of data. One of his self-created mysteries is the mystery of the alleged sudden spurt in the growth rate of income per capita. This sudden spurt never happened. In order to understand the growth rate of income per capita, its mathematical properties are now explored and explained. The explanation is illustrated using the historical world economic growth. Galor also wonders about the sudden spurt in the growth rate of population. We show that this sudden spurt was also created by the distorted presentation of data. The mechanism of the historical economic growth and of the growth of human population is yet to be explained but it would be unproductive to try to explain the non-existing and self-created mysteries of the growth process described in the scientifically unacceptable Unified Growth Theory. However, the problem is much deeper than just the examination of this theory. Demographic Growth Theory is based on the incorrect but deeply entrenched postulates developed by accretion over many years and now generally accepted in the economic and demographic research, postulates revolving around the concept of Malthusian stagnation and around a transition from stagnation to growth. The study presented here and earlier similar publications show that these postulates need to be replaced by interpretations based on the mathematical analysis of data and on the correct understanding of hyperbolic distributions.

Introduction In the subsection entitled “Mysteries of the growth process” (Galor, 2005a, p. 220) presented in his Unified Growth Theory (Galor, 2005a, 2011), Galor asks a series of questions about the mysteries of economic growth. We can take his questions one by one and show that all these mysteries were of his own creation.
His theory is not based on the scientific analysis of data but on impressions supported by the habitually distorted presentation of data (Ashraf, 2009; Galor, 2005a, 2005b, 2007, 2008a, 2008b, 2008c, 2010, 2011, 2012a, 2012b, 2012c;

1 AKA Jan Nurzynski, r.nielsen@griffith.edu.au; ronwnielsen@gmail.com http://home.iprimus.com.au/nielsens/ronnielsen.html Suggested citation: Nielsen, R. W. (2016). Puzzling properties of the historical growth rate of income per capita explained. http://arxiv.org/ftp/arxiv/papers/1603/1603.00736.pdf Scheduled for publication in 2016 in the Journal of Economics Library.

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Galor and Moav, 2002; Snowdon & Galor, 2008). Such approach to research can easily create many mysteries that simply do not exist.
One of Galor’s questions about the alleged mysteries of growth process is “What is the origin of the sudden spurt in growth rates of output per capita and population that occurred in the course of the take-off from stagnation to growth?“ (Galor, 2005a, p. 220). In just one sentence, Galor presents two incorrect doctrines: the doctrine of the presence of the sudden spurt and the doctrine of the transition from stagnation to growth, both created by the failure to follow scientific principles of investigations, which require that data should not be manipulated to support preconceived ideas but that they should be methodically analysed with the aim of learning from them. We shall show that this question makes as much sense as the question, “Why is the Sun rotating around the Earth,” and the answer to both of them is similar: the Sun does not rotate around the Earth and there was no sudden spurt in the growth rates of output per capita and population. There was also no takeoff from stagnation to growth (Nielsen, 2014, 2015, 2016a, 2016b, 2016c, 2016d, 2016e, 2016f)
We have already demonstrated that the growth of human population and the growth of the Gross Domestic Product (GDP), global and regional, were hyperbolic (Nielsen, 2014, 2016a, 2016b, 2016c, 2016d, 2016e). Hyperbolic growth is monotonic, and consequently it is also characterised by the monotonically- increasing growth rate. There is no sudden spurt in this type of distributions.
The output per capita (also described as income per capita and measured using the GDP/cap) is represented by the ratio of two, monotonically-increasing, hyperbolic distributions (Nielsen, 2015). The growth rate of this ratio is monotonic. It cannot contain “the sudden spurt” claimed erroneously by Galor.
Galor’s questions about the mysteries of growth are strongly misleading because they describe features creat

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