Compare methods

	Real-Wage and Welfare-Ratio Analysis	Historical National Accounting
Field	Economic History	Economic History
Family	Process / pipeline	Process / pipeline
Year of origin	2001	1962
Originator	Robert C. Allen (building on the Phelps Brown-Hopkins tradition)	Phyllis Deane and W. A. Cole; later Angus Maddison, Robert Allen, Stephen Broadberry
Type	Living-standards index construction	descriptive-reconstruction
Seminal source	Allen, R. C. (2001). The Great Divergence in European Wages and Prices from the Middle Ages to the First World War. Explorations in Economic History, 38(4), 411-447.	Maddison, A. (2007). Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History. Oxford University Press. ISBN: 9780199227204
Aliases	Allen welfare ratio, Subsistence-basket real wages, Bare-bones and respectability baskets, Purchasing-power wage analysis	Historical GDP reconstruction, Pre-modern national accounts, Retrospective national accounting, Reconstructed historical accounts
Related	4	3
Summary	Real-wage and welfare-ratio analysis measures the material living standards of working people by asking a deceptively simple question: how many baskets of basic goods could a worker's earnings buy? Robert Allen, refining the older Phelps Brown-Hopkins price-and-wage tradition, devised the welfare ratio—annual household earnings divided by the annual cost of a fixed consumption basket scaled to subsist a family. By specifying a spartan bare-bones basket meeting minimum calorie and nutrient needs, and a more generous respectability basket, and by converting wages and prices into grams of silver, Allen made living standards comparable across the great cities of Europe and Asia and across many centuries. The method underpinned his Great Divergence findings, showing that London and Amsterdam workers enjoyed welfare ratios far above bare subsistence while many Asian and southern European labourers hovered near it. It has become the workhorse for cross-cultural comparison of pre-industrial living standards.	Historical national accounting is the systematic reconstruction of a country's gross domestic product and its components for periods that predate official statistical offices. Where modern statisticians collect contemporaneous surveys, the historical accountant must assemble output from surviving fragments: tithe records, customs ledgers, probate inventories, guild accounts, harvest yields, and wage books. The method adapts the conventional output, income, and expenditure approaches of national accounting to the constraints of incomplete archival evidence, building value-added estimates sector by sector and reconciling them into an internally consistent whole. Pioneered for Britain by Deane and Cole and refined by Maddison, Allen, and the Broadberry school, it has produced annual GDP series stretching back to the medieval period. The resulting estimates anchor virtually all quantitative debate about long-run growth, the timing of the Industrial Revolution, and the Great Divergence between Europe and Asia.