The Weight of Essentials in Economic Activity

Abstract

The paper develops a measure for the weight of essential goods and services in different spheres of economic activity. The first measure is concerned with the sphere of production, which makes use of World Input-Output Tables to construct net-product subsystems so as to estimate the total (direct and indirect) share of essentials. The second measure approaches the same question from the consumption side and relies on Organization for Economic Cooperation and Development data. The results lie roughly in the interval of 45–70 percent and 60–85 percent in the spheres of production and consumption, respectively, with significant variation across countries. Other than certain patterns captured in cross-country group comparisons, evidence is found for the aggregate-level counterpart of Engel’s Law on the production side. The results have important implications when read in the context of the literature on the welfare state, de(commodification), universal basic income, and the imperative to adjust consumption and production in response to the looming ecological crisis.