Reply To: Literature on WWII economics


Index numbers are used to make calculations of percent change easier. In Higgs’s chart, whatever the real GDP figure for 1939 is that figure is assigned an index number of 100. Then if the 1943 real GDP figure for 1943 is 48.6 percent larger than that for 1939, the index number for 1943 is 148.6.

Let’s say that real GDP is 1939 was $92.2 billion and that it was $137.0 billion in 1943. Then real GDP increased 48.6 percent from 1939 to 1943.

Like you, Higgs was incredulous that anyone would infer from these data that the actual standards of living of Americans rose by nearly 50 percent during the early part of the war. He wrote his article to rebut that conclusion.