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Economics, Economic History

and Historical Data
Vincent J. Geloso

Every few years, a prominent economist will proclaim the rebirth of economic
history or point to its upcoming resurgence. Such utterances were heard when
Douglass North and Robert Fogel won the Nobel Prize in economics in 1993,
when Daron Acemoglu, Simon Johnson and James Robinson published their
article on the colonial origins of divergence in the American Economic Review,
and when Thomas Piketty published his Capital in the Twenty-First Century.
Yet, of the 1,509 academic job openings listed on the American Economic
Association’s website for the 2017–2018 job market, just 26 positions adver-
tised using the Journal of Economic Literature code related to economic his-
tory  (which is N). While many departments were looking for “all fields”,
which entails that this number is an underestimation of potential hires with
specialties in economic history, these numbers, nevertheless, suggest a lack of
popularity for the field. The articles published in top journals confirm this
tendency: Fig. 3.1 shows the percentage of articles published in the “top five”
general interest journals in economics that used the economic history classifi-
cation code.1 As the figure makes clear, there is no progress in the modest
interest in economic history. Alongside international economics, macroeco-
nomics and econometrics, economic history has not seen its relative impor-
tance grow since 1970 (and the exceptions are between three and six times
more popular than economic history).

1
A related exercise carried out by Ran Abramitzky (2015) for the “top three” economics journals finds an
increase in economic history representation over time. Abramitzky’s result appear to be driven by contri-
butions to just one journal: The Quarterly Journal of Economics. Taken together with my own results, this
suggests that while the total quantity of economic history appearing in top general interest journals has
remained constant over time, there has been a shift in interest between the editors of these top journals.

© The Author(s) 2018 21

M. Blum, C. L. Colvin (eds.), An Economist’s Guide to Economic History, Palgrave Studies in
Economic History, https://doi.org/10.1007/978-3-319-96568-0_3
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22 V. J. Geloso

Fig. 3.1 Share of articles using the economic history JEL code in top five journals.
Source: Card and Della  Vigna (2013). Note: The top journals here  constitute the
American Economic Review, Review of Economic Studies, Econometrica, Quarterly
Journal of Economics, and Journal of Political Economy

Why the dissonance then? To properly answer the question, it is necessary

to understand that economists are still stuck with some “big questions” regard-
ing the “big issues” for which the use of historical data has become in vogue
(e.g., development, the role of the state, the role of inequality, etc.). History
has become a tool with which to resolve ongoing debates between economists
as it allows them to extend their data in to the past. The idea is that great data-
sets going back decades or centuries may unlock the big questions.2 However,
historical data are not the same thing as economic history. Economic history
is not the same as economics that uses history. Economists will frequently use
data without considering the underlying construction (see, notably, Jerven
2013, for a discussion of this point in the case of Africa), the context in which
it was created (i.e., what biases might be introduced into the data), and the
optimal level of aggregation (i.e., statistical aggregates may often conceal more
than they reveal). This will include historical data which may be used carelessly
to arrive at improper and incorrect causal statements that may lead other
researchers (and policymakers) astray.

2
These examples would include the World Top Income Database, the Global Price and Income History
Group, the Maddison Project, the Jordà-Schularick-Taylor Macrohistory Database and the Measuring
Worth Project.

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 Economics, Economic History and Historical Data 23

The economic historian is a different beast altogether. Their task is a burden-

some one as they must simultaneously explain history with economic theory
and bring theory to life through history. In achieving the task, they must comb
through large quantities of detail that may be of relevance to their results. In
dealing with this, they  must themselves avoid the production of exces-
sive details—perhaps a desired feature of historical studies conducted in the
humanities, but a distraction to good economics (on this, see, notably, de Vries
2017). Economic historians must navigate the uncertainty of the past using the
“northern star” of economic theory which allows them to comb through the
details. The mastery of this navigation depends on a rich understanding of
theory, which takes time to mature. Finally, to arrive at convincing conclu-
sions, they must be able to use methods that will convince readers about the
relevance of their points (either through analytical narratives and/or economet-
ric methods).
These are the crucial elements which must be discussed step by step as in
the case of an assembly manual: the understanding of wide arrays of economic
theory; the ability to comb through details to get at what matters; and assert-
ing relevance. Each of these elements must be discussed individually.

The Understanding of Economic Theory

Economics is a deductive science through which axiomatic statements about
human behaviour are derived (von Mises 1957). For example, a supplier will
never (all else being equal) increase the quantity of the goods it produces if the
price falls. Alternatively, demanders will never increase demand for a good if
the price increases (all else being equal). These are axiomatic statements; they
are not up for discussion. However, imagine a government imposes a tax on a
particular good, and the tax incites a popular rebellion in the population.
How can we use the axiomatic statements (the laws of supply and demand) to
explain the rebellion? This requires an analysis of the distribution of the cost
imposed by the tax, which entails a need to collect data, measure elasticity and
arrive at an idea of the counterfactual (i.e., the no-tax) equilibrium. As it is
evidently true (i.e., an axiom) that the quantity consumed will fall as a result
of the tax, the estimation of elasticity is the assessment of the importance of
this evidence to the question studied. And there is economic history properly
done. Once the question is asked, the economic historian tries to answer
which theory is relevant to the question asked; essentially, the economic his-
torian is secular with respect to theory. The purpose of economic history is
thus to find which theories matter the most to a question.

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However, economists who do not define themselves as economic historians

would also recognise their own craft in that description. The problem is that
the economic historian, when attempting to answer historical questions, deals
with a much more daunting task. Take the tax example mentioned earlier.
Anyone familiar with American history could relate the example to the
American Revolution, as it is often conceptualised in popular imagination as
a tax rebellion. Yet, it is now well known that American colonists had a lower
tax burden than their British compatriots in monetary terms and an even
lighter one when we account for the greater income that the American enjoyed
(Lindert and Williamson 2016; Rabushka 2010). Why would a rich lightly
taxed society revolt? To answer the question, economic historians have
attempted to import insights from experimental economics (de Figueiredo
et al. 2006; Rakove et al. 2000), from rent-seeking theory (Geloso 2018) or
the wider political economy of the British colonial empire (Greene 2000).
Albeit only an example, one should notice the wide array of theory used to
disentangle the elements necessary to arrive at a valuable explanation.
Further complicating this work is the fact that two statements can be true
individually but conflicting with one another. Take the case of the often-cited
market for used cars, where information asymmetries will push out the sellers
of high-quality goods out of the market and leave consumers with only the
“lemons” (Akerlof 1970). That case, while theoretically valid, conflicts with
the theory of signalling, where individuals may invest in sending signals to
ensure consumers of quality (think about used cars websites with consumer
feedback). The signalling theory appears to provide a more relevant prediction
for the used car markets as many research articles have shown that the key
prediction of the market for lemons fails to materialise (Bond 1982).
The economic historian must be able to master a great array of economic
theory in order to arrive at convincing explanations of key historical events.
They must work in all subfields at least at an intermediate graduate level and
must be an expert in the main fields they work in. In that regard, they are able
to arrive at a rich overview of the situation. This will allow, with the comple-
mentary use of advanced empirical tools, to derive causal statements about
key moments in economic history.

Cutting Through the Mountains of Detail

Economic history is not merely the use of historical data. One must carefully
consider details about the quality of the evidence collected. This can range
from more “macro” topics such as carefully estimating gross domestic prod-

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uct (GDP; e.g., Bolt et al. 2018; Broadberry et al. 2015) to more “micro”
details.
Consider the example of agricultural productivity in nineteenth-century
Canada, where a sizeable French-speaking minority existed. That minority has
been described by contemporary visitors and many modern historians as
“poor farmers” clinging to outdated farming methods, which were unproduc-
tive and inefficient. It has also historically been poorer than the rest of Canada
(which is itself poorer than the United States) (Altman 2003). Primary sources
like the censuses appear to support this contention as outputs per unit of land
were lower for French than English farms (Ouellet 1980). However, it turns
out that the French farmers were reporting outputs in minots and land in
arpents, while the census-takers reported figures in bushels and acres. As a
minot was greater than a bushel and an arpent was smaller than an acre, the
French output per land figure was 32 per cent more than the English output
per land. Once economic historians like Marvin McInnis (1981) revisited the
issue and corrected the figures, it was realised that the French-Canadian farm-
ers were equally as productive as the English farmers (Geloso et al. 2017).
These findings, related merely to improving the quality of measurement,
overturned a wide body of literature. In fact, my more recent set of correc-
tions, which adjusts directly on the basis of ethnic composition rather than on
whole sub-districts, suggest slightly higher output figures still (Geloso forth-
coming). These corrections also show that previous corrections were “measur-
ing away” the heterogeneity of productivity levels across the colony in a way
that was biased against testing a number of key hypotheses regarding tenure
institutions. This issue of cultural differences in what measurements are
reported may, at first sight, appear irrelevant. Yet, as shown earlier, it matters
crucially in assessing why the French-Canadians were poorer than other North
Americans.
This is a potent example of the craft of the economic historian. They must
discover small details about seemingly complex issues as weights and measures
in the distant past. Knowing the details yielded dramatic improvements in
our understanding of (non-existing) productivity differences across ethnic
groups. It also shows that the economic historian does not take the data “at
face value”. The data must be surveyed to see whether they are suited to the
question asked. This requires us to delve into “how” the data were assembled,
by “whom” they were collected and, crucially, for “what” purposes. The data
cannot simply be entered into statistical software in order to mindlessly run a
regression.
Another even more potent example is that of Acemoglu et al. (2001), who
studied the role of settler mortality in the early days of colonisation and the

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institutional quality of those colonised polities later in time. The key conclu-
sion of that paper was that it was more likely that the colonising power would
implant “extractive institutions” in  locations where settler mortality was
higher. And conversely, the colonising power was more likely to invest in
institutions such as well-enshrined property rights in locations with low set-
tler mortality. That theory was logically consistent, thus responding to what
was mentioned in the previous section, but it was empirically flawed. David
Albouy (2012) showed that Acemoglu et al. (2001) misinterpreted the data
they were using by mixing incompatible types of mortality rates. Once some
basic adjustments were made, the results that Acemoglu et al. pointed to were
partially reversed. This shows the crucial importance of caring about the
“story” behind data.

Economic Relevance
The economic historian must also show the relevance of the answer they pro-
vide. If vast sways of data are collected to show an undisputed point of eco-
nomic theory—even if done to the highest level of empirical credibility—the
contribution still needs to prove economic relevance. A great data design must
serve a “big question” in a way that marginally brings us closer to a convincing
answer.
Consider another example related to Canada. The French minority of
Canada has long been considered exceptionally short in stature—something
that has been labelled as a “striking exception” within Canada (Cranfield and
Inwood 2007). As stature is a good proxy for living standards, this is akin to
saying that the French-Canadian was poorer than other Canadians. That gap
existed as far back as the late eighteenth century (Arsenault Morin et al. 2017)
and still exists today. The issue of relative poverty is a relevant one, most
would argue. It may even be considered a “big” question.
But the answer that is economically relevant is not necessarily found in the
“big” things. In the case of the heights of French-Canadian in the distant past,
this answer lies in the way by which millers were incentivised to transform
wheat into flour. The French-Canadians were known for eating low-quality
bread laced with dirt as the wheat that was transformed was not cleaned prior
to grinding (Geloso and Lacombe 2016). The flour was thus deleterious to
health. Why would this be the case? The answer, provided by Geloso and
Lacombe (2016), was that landlords who received estates from the crown had
monopoly rights over milling but had the obligation to provide those mills
and provide the milling at a fixed rate but only on the domestic market. In

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order to circumvent the price controls, low-quality flour was produced for the
domestic market  and high-quality flour was exported. Moreover, the land-
lords could make a hefty profit from the residues of milling. When wheat is
processed into fine flour (for higher quality baked goods), one must sift the
wheat residues (brans and middlings) from the final product. As they were the
sole producers of these residues, the landlord kept increasing prices faster than
the overall price level for grains. This pushed up the price of raising animals
and discouraged pastoral production which could have produced calories and
protein cheaply.
The example above is one where an apparently minor issue—flour qual-
ity—may have economic relevance. The incentives generated by the institu-
tions surrounding the production of flour directly and indirectly worsened
nutrition in ways that may have contributed to the relatively short stature of
French-Canadians. The example also encapsulates my other points made ear-
lier. To showcase relevance, the economic concepts used encompassed ele-
ments of the literature on regulatory economics, health economics and
industrial organisation. It also required an understanding of the details behind
the production of flour, which are then explained through the vehicle of well-
mastered theory.

Advice for New Scholars

For those who consider venturing down the path of becoming an economic
historian, my suggestion is to read voraciously in both economic theory and
historical topics. Do the two simultaneously. The economic theory will allow
you to see economic puzzles in historical events. Eventually, you will find a
topic that fascinates you. Within that topic, pick a question. It would be best
if you start with a modest one in order to use it as a training tool. The steps
described in this chapter are those that you will develop in this process and
they will turn you into—at the very least—a competent economic historian.
This will require patience. However, as you will gradually master these skills,
they will become marginally easier to use and will permit you to make signifi-
cant contributions.

Reading List
Abramitzky, Ran. 2015. Economics and the Modern Economic Historian. The
Journal of Economic History 75 (4): 1240–1251.

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Acemoglu, Daron, Simon Johnson, and James A.  Robinson. 2001. The Colonial
Origins of Comparative Development: An Empirical Investigation. American
Economic Review 91 (5): 1369–1401.
Akerlof, George. 1970. The Market for Lemons. Quarterly Journal of Economics 84
(3): 488–500.
Albouy, David Y. 2012. The Colonial Origins of Comparative Development: An
Empirical Investigation: Comment. American Economic Review 102 (6):
3059–3076.
Altman, Morris. 2003. Staple Theory and Exportled Growth: Constructing
Differential Growth. Australian Economic History Review 43 (3): 230–255.
Arsenault Morin, Alex, Vincent Geloso, and Vadim Kufenko. 2017. The Heights of
French-Canadian Convicts, 1780s–1820s. Economics & Human Biology 26:
126–136.
Bolt, Jutta, Robert Inklaar, Herman de Jong, and Jan Luiten van Zanden. 2018.
Rebasing ‘Maddison’: New Income Comparisons and the Shape of Long-run
Economic Development. Groningen Growth and Development Centre Research
Memorandum, Paper No. 174.
Bond, Eric W. 1982. A Direct Test of the Lemons’ Model: The Market for Used
Pickup Trucks. American Economic Review 72 (4): 836–840.
Broadberry, Stephen, Johann Custodis, and Bishnupriya Gupta. 2015. India and the
Great Divergence: An Anglo-Indian Comparison of GDP per Capita, 1600–1871.
Explorations in Economic History 55: 58–75.
Card, David, and Stefano Della Vigna. 2013. Nine Facts about Top Journals in
Economics. Journal of Economic Literature 51 (1): 144–161.
Cranfield, John, and Kris Inwood. 2007. The Great Transformation: A Long-run
Perspective on Physical Well-being in Canada. Economics & Human Biology 5 (2):
204–228.
de Figueiredo, Rui J.P., Jr., Jack Rakove, and Barry R. Weingast. 2006. Rationality,
Inaccurate Mental Models, and Self-confirming Equilibrium: A New
Understanding of the American Revolution. Journal of Theoretical Politics 18 (4):
384–415.
de Vries, Jan. 2017. Changing the Narrative: The New History That was and is to
Come. Journal of Interdisciplinary History 48 (3): 313–334.
Geloso, Vincent. 2018. British Public Debt, the Acadian Expulsion and the American
Revolution. In Public Choice Analyses of American Economic History, ed. J. Hall and
M. Witcher. Cham: Springer.
———. forthcoming. Measuring Away the Importance of Institutions: The Case of
Seigneurial Tenure and Agricultural Output in Canada East, 1851. Social Science
Quarterly.
Geloso, Vincent, Michael Hinton, and Vadim Kufenko. 2017. The Equally “Bad”
French and English Farmers of Quebec: New TFP Measures from the 1831
Census. Historical Methods: A Journal of Quantitative and Interdisciplinary History
50 (3): 170–189.

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Geloso, Vincent, and Alexis Lacombe. 2016. Why was Flour of Poor Quality? The
Impact of Seigneurial Laws and Price Controls on Flour in Quebec during the
Colonial Era. Agricultural History Review 64 (2): 181–195.
Greene, Jack P. 2000. The American Revolution. American Historical Review 105 (1):
93–102.
Jerven, Morten. 2013. Poor Numbers: How We are Misled by African Development
Statistics and What to Do About It. Ithaca, NY: Cornell University Press.
Lindert, Peter H., and Jeffery G. Williamson. 2016. Unequal Gains: American Growth
and Inequality Since 1700. Princeton, NJ: Princeton University Press.
McInnis, R. 1981. Some Pitfalls in the 1851–1852 Census of Agriculture of Lower
Canada. Histoire Sociale/Social History 14 (27): 219–231.
von Mises, Ludwig. (1957) 2006. Theory and History: An Interpretation of Social and
Economic Evolution. Liberty Fund.
Ouellet, Fernand. 1980. Lower Canada 1791–1840: Social Change & Nationalism.
Toronto: McClelland & Stewart.
Rabushka, Alvin. 2010. Taxation in Colonial America. Princeton, NJ: Princeton
University Press.
Rakove, Jack., A.  Rutten, and B.  Weingast 2000. Ideas, Interest, and Credible
Commitments in the American Revolution. Working Paper, Hoover Institution,
Stanford University.

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