What is the Misery Index and why should you care about it?
The Misery Index is a concept used to measure the economy’s health. In particular, economists and politicians have used the Misery Index to gauge the effectiveness of Presidents’ stewardship of the economy since the 1960s. You should care about it because another Presidential election is heating up and candidates are already bandying the term around. You should care because at least one candidate already appears to be tweaking the concept to make it say what he wants it to say.
On 8 March 2011, the Boston Herald published an opinion/editorial article written by Republican presidential candidate Mitt Romney. In this article, Mr. Romney strongly criticized President Obama’s handling of the economy. While that criticism may be justified, Mr. Romney appeared to take liberties with the facts on the Misery Index. Specifically, Mr. Romney compared the “Obama Misery Index” to the high Misery Index during the 1980 presidential election in which the incumbent, Jimmy Carter, was denied reelection by Ronald Reagan. Mr. Romney stated the “Obama Misery Index” is “at record high, indeed it makes the malaise of the Carter years look like a boom”.
The problem is that it turns out Mr. Romney’s “Obama’s Misery Index” is something Mr. Romney developed, and it is not calculated the same as the Misery Index in use since the 1960s. Therefore, comparing this invented measurement to the historical Misery Index of another President is like comparing apples to oranges. It is misleading. When the traditional Misery Index and data from a reliable source (http://www.miseryindex.us/) are used, the Misery Index as of the end of June 2011, 12.76, was not a record high. The record high Misery Index, occurring in June 1980 in the last year of Carter’s Presidency was 21.98. The Misery Index averaged 16.26 throughout the four years of the Carter Presidency. The Carter years hardly “look like a boom” as Mr. Romney stated. The current Misery Index of 12.76 is far better than the Misery Index when Mr. Carter was in office and in fact matches the Misery Index of 12.76 that Mr. Reagan had in 1983, the third year of his first term as President. While the current Misery Index is the highest 28 years, it is not higher than in the Carter years as Mr. Romney implied. Mr. Romney has subsequently declined to clearly explain why his “Obama Misery Index” differs significantly from historical facts, although he continues using it.
So what is the “traditional” Misery Index, the one you can use to compare without bias how Presidents did with the economy? According to Investopedia.com (http://en.wikipedia.org/wiki/Misery_index_(economics), Economist Arthur Okun, an adviser to President Johnson in the 1960s, developed the original concept of the Misery Index and it is an easy calculation:
The current (or historical at a point in time) unemployment rate
PLUS
The current (or historical at a point in time) inflation rate
EQUALS
The Current (or historical at a point in time) Misery Index
For example, the June 2011 unemployment rate of 9.2% PLUS the June 2011 inflation rate of 3.56% EQUALS a Misery Index of 12.76. (Source: http://www.miseryindex.us/)
To make things even easier, there are a number of websites devoted to the Misery Index. The best, in my opinion, is www.miseryindex/us. Although the Misery Index did not exist until the 1960s, this website contains data going back to 1948. The website shows the Misery Indices, unemployment rates, and inflation rates from 1948 to now, by month, year, President, and Congress. This website provides all you need to keep our politicians honest when they speak of the Misery Index. More important, the website provides all you need to be able to tell when our politicians are lying about the Misery Index.
I hope that this explanation of the Misery Index will help you make informed decisions in the upcoming election season. After all, the Civics books always said that informed voters make better voters!
