One of the strangest charts in economics history is Nordhaus’s Labor Price of Light: 1750 BC to Present. The chart illustrates the cost of lighting a room. For hundreds of years, there is hardly any movement at all, then around 1800, it falls at a nearly 90 degree angle. People used to have to work very hard for the small amounts of illumination they had. Then we discovered gaslight, which was cheaper than candles, and then we discovered kerosene which was cheaper than gaslight. All these new innovations caused the continual decline in the price of lighting, culminating with the discovery of electricity. Lighting had finally become so inexpensive and the wage rate had grown so much that people no longer had to worry about how they’d pay for light. This signified a large economic growth.

When Solow created his growth model, economist became worried about the definition of economic growth. Nordhaus warned that growth estimates were off due to the way “goods were linked into the index.” He argued that growth estimates were only good if the price estimates were correct, and price estimates, he stated, ignored technological innovation. There had been so many technological changes since the 1800’s that Nordhaus felt real output understated how much our standards of living have improved. His solution to this problem was to take samples of goods and have economists measure their prices against the cost of light.