The Misery Index was devised by Arthur Okun, who is better known for Okun’s Law, which relates changes in unemployment to changes in gross national product (GNP), but only when unemployment is with the range of 3 to 7.5%. Okun was on the Council of Economic Advisers (CEA) for President Kennedy and President Johnson, and created the index in the 1970s, after he had left the CEA and gone to work for the Brookings Institution.
Devised during a period of “stagflation” — a sluggish economy at a time of high unemployment and inflation — the Misery Index links those three factors in a simple measure that is meant to reflect the well-being of an economy. It is computed by summing the unemployment rate for a given period with the inflation rate during that period. The formula can be written:
Unemployment Rate + Inflation Rate = Misery Index
An increase in the index signals a decline in the economic climate because rising inflation and unemployment spur an economic slow-down, while a decrease in the index signals an improvement in the economic climate. It is common to line up the rating with presidential terms. Several analysts point out that in the period 1950 to 2010, it was lowest in July 1953 at the beginning of President Eisenhower’s term — at 2.97% — and highest in June 1980 during President Carter’s term — at 21.98%.
Other analysts have criticized the index for an inaccurate portrayal of the economy. This has led to creation of alternate indexes, including the Real Misery Index, the Ultimate Misery Index (UMI), and the Household Misery Index.
There are other offshoots as well. A sports writer, Jim Caple, worked out a 60-point MLB® (Major League Baseball) Misery Index in 2004. He then followed up with an NFL® (National Football League) Misery Index. The term is also the name of a deathgrind band formed in Maryland in 2001, the music of which is described as a combining of death metal with grindcore.