Odd Lots - What 300 Years of Firewood Prices Say About the Economy

Episode Date: July 25, 2025

Today, the cost of energy — things like electricity, or gas, or heating oil — is considered an essential piece of economic data. But it turns out that for much of America's history, we've been overlooking a crucial economic figure: the cost of firewood. For decades, firewood was the dominant energy source powering the US economy. And yet there aren't really any official statistics about firewood prices. After all, how would you even go about putting a price tag on something that's growing in a lot of people's backyards? On this episode, we speak with Nicholas Muller, a Carnegie Mellon University economist and author of the new paper, "Firewood in the American Economy: 1700 to 2010," which attempts to fill in this crucial gap in our economic data. We talk about how Nicholas went about finding 300-year-old firewood prices, and what the new data series can tell us about the development of the US economy and the relationship between growth and energy.Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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Fast internet, long ad. But it's so worth it. Visit bell.ca for more details and to check availability. Bell, Connection is everything. Hello and welcome to another episode of the Alldots podcast. I'm Tracy Allaway. And I'm Joe Wisenthal. Joe, you know what's been missing in my life? Go on. Chickens.

Oh, yes, actually. Chickens still missing in my life. But also a comprehensive series of historical firewood prices in the U.S. for the past 300 years. You know what? We have data on literally every other commodity in the world, but I don't have a 300-year time series on firewood prices. And I always feel like if I'm not. I just had that number, then I would have the complete picture of commodities. Well, I know we're sort of joking. But this is actually important because if you think about the U.S. in the 1700s or the 1800s, people used firewood. The vast majority of America's energy consumption came from wood.

Wait, do you remember a couple months ago when I was that guy who brought up wages of destruction in every chat? Are you going to do it again? No. Oh. Well, you just did. No, now I'm going to be the guy who brings up Moby Dick in every conversation. Oh, yeah. I knew this was coming.

And so I'm really interested in energy transitions in the 1800s because one of the things that, you know, has come up in some of our past conversations, such as with Bob Brack, et cetera. Whale oil is basically the only energy source that we've completely eliminated. Every other historical energy source that we've had, we're still using it to some degree. They never totally disappear. And so I'm very interested in the phenomenon of like, past historical energy transitions. People talk about the transition now.

But it's interesting to sort of examine other periods when one form of fossil fuel or other fuel like went out of style, so to speak, or became un-economical. Well, I have to say, as the proud owner of a wood burning stove now and formerly a coal-burning stove. Yeah, you're interested in energy transition. Absolutely. So I am very pleased to say that we have the perfect guest. we are going to be speaking with the author of a paper that's called Firewood in the American economy, 1700 to 2010. And it is all about collecting historical data on firewood prices and then figuring out how that fits into the wider economy and measures of other things like output and productivity and things like that. So we have Nicholas Muller.

He is the Lester and Judith Lave Professor of Economics, Engineering and Public Policy over at Carnegie Mellon. So, Nick, welcome to the show. Thank you so much. The pleasure to be here. Why don't I start out with why Firewood? And I know I mentioned that Firewood was the majority of U.S. energy consumption for many, many years. Is it right to think of it sort of as like oil, the 1800s equivalent of oil powering the entire economy? Yeah, so there are two reasons why I focused on this particular topic in a paper.

one, as you said, somewhere around or before the Civil War, back before the American Revolution and the founding of the country, essentially all the energy in the U.S. economy, whether it was in households or firms doing primitive things, it was all coming from firewood. And so the fact that the academic literature and government statistics didn't really have a reasonably comprehensive time series of these prices seemed like a really big gap. to me. And so that was one reason to just set out filling that knowledge gap. The other was prior to being at Carnegie Mellon, I taught at Middlebury College in Vermont. And my wife and kids and I used to get heat from firewood in a wood stove. And so you participate in these informal markets for firewood even today. And it got me thinking about what that must have been like long ago. And sure enough, it turned out to be a pretty interesting process to gather these prices. I never thought of going to Lowe's to buy a bundle of firewood as participating in an informal market. I guess it is formalized nowadays.

But certainly if you're a professor, that's probably how you're thinking about it. I used to live in Vermont. And I remember, you know, it was not that uncommon for people to buy a cord of firewood or however much they anticipated needing for the winter to heat their homes, et cetera. So I get the idea that like, okay, fire was this dominant source of energy for a long time in the way. the American economy. What are we gained by actually having the numbers? Like, okay, we know it. We know the fact about Firewood's existence and prominence. What does it help us now, and we'll get into the details, but what does it help us now to actually have some sense of the size and scale? Yeah. So I think two primary reasons. One, when we look at existing prior to this paper,

existing estimates of the early American economy and gross domestic product, it had very, very sparse information on firewood prices, and they turn out to be really low compared to the prices I gathered. And so what that means is even with the same estimates of how much wood was consumed, those existing estimates of GDP that included that measure were really low in that regard. So the energy cost of economic growth using existing estimates looked much, much lower than what these updated numbers suggest. So size of the economy. Two, growth in the economy over time, especially during the early to mid-1800s, appears to be different when you use the updated series.

And then three, when you consider that the bulk of firewood was produced in the agricultural sector, often in an informal way, meaning just home production. but even when you think about the wood that was hauled into some of our newly forming cities, that was really all coming from agriculture. And that means that when we think about existing measures of agricultural productivity that included the sort of things you would expect, livestock and crops and the like, it was really missing this important energy commodity, which was actually being attributed or should be attributed to that sector. And so agricultural productivity during this period would have been mismeasure.

as well. So you mentioned the data gap and how significant this would be for, you know, measuring something like the growth of the U.S. economy in those years. I have to imagine one of the difficulties in gathering the data for something like this is because Firewood is, or was, still is, an informal market, as you pointed out. And I know I joked earlier that Firewood was like the oil equivalent of the 19th century, but of course the big difference is, Not everyone has an oil gusher in their backyard or a refinery. People in the 1800s could just go out into their land and chop down firewood. So in some respect, they weren't even paying any prices for it.

So I guess my question is, why didn't the data exist before? And then how did you actually go about gathering it? Sure. So the critical process that enabled the prices and the price data and the records of advertisements and exchange to start showing up in a systematic way. It was urbanization. What ended up happening, which, you know, this is well known in U.S. economic history, somewhere between the American Revolution and the Civil War, the population started to urbanize. We were still pretty agrarian around the time of the Civil War, but people were moving to cities.

And once you move to cities, you lose that idea, Tracy, that you just mentioned, which is we all have a woodlot in our backyard. You don't if you live in a city. And so the process of urbanization gave birth to markets for firewood that actually passed through commercial exchange. The agricultural sector was still producing the firewood, but now it was being hauled into cities by various means and sold in, I don't want to say, organized markets in the sense that your readers might think, but in the sense that there was some exchange, not just the use of time and labor to procure the wood. And so that led to records of really advertisements in that period where we started to see an abundance of data on wood by cord, by species, by month, by year, that we could use software to extract from PDF images. Hmm.

So what is the, let's talk about the data itself, because we're, we can't. we've been talking about the why of the data and the how of the data. But what are the top lines in terms of what your research showed? Yeah. So on the data gathering process, it's important to note that I'm sure as I'm talking about urbanization, urbanization happening in the 1800s, you know, the price series go back to 1700. I actually have in an appendix prices from the 1600s. That begs the question where those came from. And they come from largely probate and estate records where when the head of household is deceased, what would happen is legal entities would come into the household and they would value assets. And much like they do today, there'd be

a settlement of an estate that includes a house and barn and animals and all the things in the household. And often one of the things in the records was five cords of firewood or, you know, 10 cords of firewood or one court. And they would value it because they had to. legally in terms of documenting the value of the estate. So the really early stuff came from there. Now, back to Joe's question about what do we learn about the prices themselves and the top line numbers? There's really three patterns that come out. There's lots of nuance, but there's three patterns that come out in the data. From 1700 to around 1800, there's lots of noise and volatility in the price series, but there's no significant trend when you correct for inflation.

So that means firewood prices were basically changing at the same rate that the price indices, the equivalent of a consumer price index, were changing over that period of time. Then from 1800 to the Civil War, firewood prices started to increase in real terms, implying that they were rising more rapidly than inflation, often between half a percent and one percent real per year. And then after the Civil War, up to the modern era, there really wasn't a lot of evidence of a systematic price change until late in the 20th century around the energy crises that we're all familiar with in the 1970s. There was a systematic move back to firewood in some parts of the U.S. And that shows up as real price increases. It probably had to do with the oil price spikes at the time.

You have these three time periods where there's no real change, there's rapid. price appreciation between 1800 and the Civil War, and then there's not a lot of evidence of systematic price changes afterwards. And it's that middle period that I think is the most important for how we think about the U.S. economy and how we think about the ensuing transition from biomass to coal. Well, I definitely want to talk about that transition, but just before we do, why did prices actually increase that quickly in that time period? Because I imagine, okay, for prices to move. You have changes in supply and demand, but the supply of wood probably isn't changing that rapidly. Is it all just a demand story? Yeah, clearly the demand side is at work.

The population is growing. We're engaging in more manufacturing activities. Iron manufacturing from the Civil War back in time to when it started, relied exclusively on charcoal. So that was, you know, cut down wood, bake the moisture and impurities out of it, and then use the resulting carbon to produce the heat that was needed. So things were growing. The demand side was growing. But it's my sense. And this is really from reading about the time. I don't have an econometric or an empirical way to nail down a specific cause for the price increases. But I think what was happening based on reading is that the supplies of wood were getting scarce closer to cities. And so what ended up happening was the transport distances and hence costs to get wood into the cities for both consumers and firms was increasing.

Concurrent with that process, the railroad network was growing. And so on the one hand, you would imagine that increasing rail networks would reduce costs, right? You'd just load up a train, you get the train into the cities, and that would be much more cost effective than, putting it in a cart and pulling it with a horse or putting it in a canal. But the other thing to remember is that locomotives until really after the Civil War did not run on coal. They burned wood as well. And so you have this ambiguous effect of the railroads that may have lowered costs, but then they were voracious consumers of wood themselves. And so I think it is a scarcity story. It's not a scarcity story in the sense that the forest were gone, but rather the forests that had been feeding urban demand for wood were receding, and that led to increases in transportation costs to get the fuel into cities and the demand centers.

Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, Go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing in subject to risk Vanguard Marketing Corporation distributor. Eating well shouldn't be complicated, but somehow it turns into recipes, prep, cleanup, and half your Sunday gone.

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What's so worth it. Visit bell.ca for more details and to check availability. Bell, connection is everything. I guess the other dynamic that I'm curious about in your story is sort of the labor side. So if you have a bunch of people moving from rural areas to cities, that's fewer people who are theoretically in the business of cutting down trees. And I'm curious if in your research, you know, was there a scarcity of labor to cut down? the trees. And I'm just curious, were there technological or productivity gains that you found in the business of cutting down trees, period, such that in the mid-1800s, did that process

look substantively different than maybe earlier in the 18th century? The only thing I can really say about the agricultural labor supply is regional. And there's a table in the paper that unpacks agricultural productivity growth in the northern areas and the southern areas of the country. And one thing that table shows is that, I think if I have it right, the rates of consumption of firewood outpace the rate of growth of agricultural workers in the north and kept pace in the south. And so if there is an instance where scarcity and labor supply, which would have driven up wages, was working as a force to drive up prices, it would have been the north. And that probably also,

aligns with the urbanization dimension, right? Because the cities, Philadelphia, New York and Boston were big. They were growing rapidly. And so those two forces would align. On the technology piece, I really can't say anything about harvest or about felling. But what I can say is the technology that was used to move wood around. So whether it was going into a city or whether it was going into a village and being sold, we know that that had to have matured from very simple transportation means of transportation like animals and carts to canals and to augment boats on rivers, like the Erie Canal is an example where we know firewood was shipped, to ultimately railroads, as I mentioned earlier, which were strategically designed to connect population

centers, which the data suggests we're growing very rapidly at this time. So there's clear technological change. It's just the funny thing about railroads until about the Civil War is they were both enhancing supply of firewood and demand centers, but they were also consuming really crazy amounts of wood. I mean, there were multiple cord stashes along rail lines that were monitored or manned by the railroads. And they had cords of wood, and the trains would pass by and stop, and they'd load up the hoppers with firewood that had been felled from the surrounding areas. So this was a really significant demand side associated with that technological change. Okay, so the technological change was mostly on the transportation side, not like, I don't know, people adding a new type of blade

to their axe or something like that. But this actually reminds me of something I wanted to ask, which is anyone who has ever lit a wood fire will know that not all wood is created equal. And I certainly have been on the receiving end of bad wet wood popping in my face and things like that. Did you take into account quality of wood or different species? Yeah, it's really neat. So much of the data does not provide deep. details on type of wood or whether it's seasoned or dry. However, there are some of the data provided that do report, say, cord of oak, court of hickory, court of pine. So they do report

differences by species. And then the data for Portland, Oregon, has about two decades worth that distinguishes grades of how the extent to which it's seasoned. So there's green cords, there's half dry cords and then there's fully dry cords. And so what do those data tell us when you try to assess differences, systematic differences in price, let's say to start by species, there's a figure in the paper in one of the appendices that shows there's a pretty clear positive correlation between prices and energy content of the species of wood. And so that kind of makes sense that a cord of hickory or a court of oak would be worth more to the consumer and in equilibrium would have a higher market price than say a cord of pine or a cord of a softer hardwood. And so the data support that.

The second point to make is even though the information on seasoning of the wood or aging of the wood is sparse, I do observe the month at which the prices are posted for a lot of the data. And using that information, you can see there's a pretty steep discount for wood marketed in the summer. And one interpretation of that is that there's just lower demand, and that's fine. The other interpretation is that there is storage and seasoning going on, where some portion of wood harvested and or purchased in the summer is then stored to be sold at higher spot price times in the winter. and that would reflect systematic differences in whether the wood is seasoned or green according to the season. So there's like a contango effect in the firewood market in the firewood market or seasonal contango, so to speak. I have another technological question. You know, you mentioned at the very beginning of your time series, collecting data from probate sales and so forth,

which I think inherently are sort of like private data that most people would not have access to unless they tried to the newspapers. which is more important, and I think this is an interesting story of commodities. Do you observe anything, I guess what I would say of spreads or dispersion of prices as transparency became more of a thing, so such that once Firewood became something that got advertised in a newspaper, are the range of prices that were transacted in a given time period narrower than they were when this was more private archival data that you're working from? The fascinating question. One thing, as an academic, one thing I hope is that having invested time and research assistance time in putting together this data set is that there'll be multiple papers that come from this, right?

And the ability to ask and answer a whole series of questions. One of those is price dispersion. Yeah. Right? And so this idea that in a given market or maybe across markets, there are systematic differences in the range or spread of prices for similar. commodities. So largely, that's a topic for future research. But what I will say is when you look at the period from, say, 1800, just roughly, 1800 to the Civil War, I do see regional convergence in prices. So southeast, northeast, Midwest. I see some evidence of regional convergence. And the working

hypothesis there is that the railroads were such an effective means to move the wood that if If there were persistent price differences between, say, the Midwest, which included Ohio and Pittsburgh and Michigan and the northeastern cities, then the entrepreneur could put a bunch of wood on a train in Ohio and ship it over to New York, Philadelphia, and Boston, and earn money, and then therefore eventually close those spreads. And as I said, I do see some evidence of that occurring as the railroad networks would have been growing up to the Civil War. After the Civil War, people were basically turning to coal.

And so, you know, you wouldn't see much. Tracy, there's just like our first Dinson Dean conversation all over again. It's just the same, like, the idea of, like, you know, the degree to which you're outside of the trucking lane or outside of the rail lane and these price convergence, nothing ever changes. No, apparently not. Well, actually, we just said that. But something did change in the mid-1800s, which is, I guess, the arrival of cheaper coal. What exactly was it about coal or the development of coal that suddenly made it a big competitor to firewood? So the data show, well, let me say to be clear, what I did for coal was to assemble existing price estimates.

So to be very clear with your listeners, I didn't go and gather a bunch of original information on coal prices. There were and are very good data sources stretching back into the 19th century on anthracite by two minutes coal. and I use those. And anecdotal information, qualitative information, learned from reading that basically commercial coal production really got going around and just before the Civil War, maybe 1830, 1840 at the earliest. And I can't speak technologically to the process of extracting and shipping coal. It's just not, I don't, there are people that know a lot more about that than I do.

But as with many production processes, it, exhibited a pattern of declining cost, unit costs, over time, as production ramped up. And you see that in the existing coal data. It's just an empirical regularity. Now, bear that in mind, as I repeat, in the mid-1800, as the economy is growing from 1800 towards the Civil War, I had just mentioned that firewood prices were increasing, right? So you have these contrasting patterns for two energy fuels that tell us one was getting cheaper while the other one was getting more expensive. So if I stopped there and said, you know, that's the story, that might make sense.

But the other thing to mention about firewood is it's really bulky, right? I mean, a cord is four by four by eight, and it's got a good amount of energy stored in a dry cord or embodied in a dry cord. But the same amount of energy comes from a lot smaller, of coal. And so from a consumer point of view, or from a business point of view, if you've got to pay for storage or you have to manage an inventory, not only is coal getting cheaper, but it's also easier to work with in that sense. And I think that it was those two dimensions, so both literally the price and the non-quantitative attributes of the fuels that would have contributed to the

transition. The idea, there's just more on any given car load, of coal, there's just way more B2Us than there would be on that same carload of firewood. Yeah, if you had a volume measure. Yeah. Right. So four by four by eight, dry firewood, four by four by eight of coal, you're going to get more B2Us out of coal, especially anthracite. And anthracite was the one that was really taking off at this time. I think what's interesting to me, you know, going back to one of your first answers about your study, is,

and this gets back to a theme that we've talked about a lot on the show. like coal didn't kill firewood. I mean, your story as you describe it ends in the late 20th century. So even though we may talk about the coal era having in large part replaced firewood from an industrial standpoint, from a price standpoint, you know, the firewood industry persisted in a meaningful sense it sounds like for at least another century. Yeah, there's a really nice database that the census put together that by state shows the share of home heating fuel. expenditures by major fuel. That goes back to 1940. And if you look at 1940, states like Oregon or the state of Washington or some of the states in New England have appreciable shares of home heating that's coming from wood. So 1940s a long time ago, I get that. But at the same time, it's not

1840, right? It's not the Civil War. And those data are evidence in a sense that, yes, I would agree with the fact that we really transition from a biomass to a fossil economy around the Civil War. but I would also agree that it's not as if demand for firewood was completely extinguished at that time. Clearly, there were pockets of continued significant reliance on the fuel. And then we had a massive energy price shock in the 1970s. And what that clearly showed was a reversion to reliance on the fuel as a means to hedge against home energy costs. I think you mentioned the 2008 financial crisis as well saw demand for firewood go up and maybe prices from what I remember. But that's such a fascinating data point because, A, it illustrates just

how bad the crisis actually was that people had to turn to firewood because they couldn't afford to heat their houses in other ways. But then it also goes to the point that firewood is Lindy, I guess. Yeah, it's a very interesting phenomenon to consider the link between social and, let's say geopolitical disruptions and consumer habits that influence things like fuel choice or carbon emissions. The financial crisis is one, the energy crisis is another. I have a related working paper that demonstrates that U.S. carbon intensity defined as tons per dollar GDP peaked in 1917. And that's the year right before World War I ended and the Spanish flu outbreak happened, which were two both demand and supply shocks working in the same direction.

If you go back even further, the civil war is really the flipping point here for the relationship between household income and demand for firewood. And that's shown in one of the figures in the paper where the income elasticity, the percentage change in income is associated with the percentage change in consumption of firewood, flipped from a positive number. as we got more wealthy, we used more firewood to a negative number. As we got more wealthy, we actually used less firewood as we transitioned to coal. And those all are lining up on significant geopolitical or social periods like recessions and wars and things of that nature.

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Right now, get 11 meals, free shipping, and free sides for life. Hurry, this offer won't last long. Go to factormeels.ca and use code fit. That's 11 meals, free shipping and free sides for life, but only with the code fit at factormeals. Factor, Canada's number one ready-to-eat meal delivery service. Bell Pure Fiber Internet? It's fast, like really fast. And the offer, it's good, like really good.

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surveillance on Apple, Spotify, YouTube, or anywhere else you listen. On the East Coast, listen at lunch. And on the West Coast, listen as soon as you wake up. That's the Bloomberg Surveillance Podcast with Tom Keene, Paul Sweeney, and me, Alexis Christophores. Subscribe today, wherever you get your podcasts. Bloomberg Surveillance, Essential Listening, each and every business day. Is there a Moby Dick for Firewood? Is there a novel?

You know, like I've read about the whaling industry and then I, you know, read a novel about it. Is there a story that I could read that will sort of give me a feel for the, you know, the early 1800s, Firewood? industry? Is there a book that Joe is going to read and then talk incessantly about for the next three months? So have you read cod? I've heard of it. Yes. That's a that's a nonfiction though, right? It's nonfiction. Okay. And then the same author wrote a book called salt. Okay. It's all about cod, all about salt. There should be a book. Okay. The title Firewood or Wood or something.

The closest thing I can suggest is a paper by, I believe it's Arthur Cole in 1970. And the title is is something like the mystery of fuel wood pricing in the United States. And it is largely qualitative, and it's actually asking one of the questions that this paper tries to answer, which is, we were utterly reliant on this energy source, and yet there is no systematic evidence of how prices behaved from the revolution to, in his case, 1970, and why is that? And so it's a great read. It's not, you know, too dense and academic. It's more written like something that would be a pleasure to read than just purely an academic piece. I'll have to check it out. So I'm curious, you know, obviously the quote, energy transition unquote, is something that we think about now and talk about a lot. Now, you know, on the trajectory of oil demand, the trajectory of natural gas demand and so forth, all of which are highly uncertain. Other than filling in the history. historical record for this important thing and sort of reorienting our understanding about

agricultural productivity and GDP, et cetera. Would you say there are any takeaways from your research that sort of speak more directly or speak directly to some of the energy debates that we're having right now? Yeah. So I think there are three ways in which there's a plausible connection between the conclusions in this paper. And I don't want to say just the U.S., but globally, some of the issues related to energy and the environment. The first I kind of mentioned already, which is often energy transitions are associated with some seemingly exogenous source of social upheaval. So in 2008, 2007, U.S. carbon emissions in levels peaked. Now, it's just really interesting that that again happened in a year after which the U.S. economy really did not do well for a number of years.

And I'm just talking about carbon emissions. I'm not talking about GDP or anything in the sort. When we go back to 1860, we see this same pattern happening with what primary fuel consumers and firms are turning to in order to produce and use energy. So financial crisis, recession, massive dislocation in the economy associated with the Civil War and its associated effects. So there's that energy transition happening in periods of upheaval. Two is just the notion of resource scarcity. We're talking in this paper about renewable resources. We're talking in this century at this time about non-renewable resources and the continued

reliance on coal oil and gas, what that means for sustainability and how we think about growth and the sustainability of growth and development as we consider. reliance on different energy sources. And then the third, the Biden administration had taken the very important step of using tools that we have for almost a century used to measure output. So the national income and product accounts, GDP. It had used those tools to then measure and estimate the value of things like ecosystem services and pollution damages and natural resources. And what this paper shows is that prior to the

process of urbanization and firewood sort of entering markets, as we discussed a moment ago, energy was coming from the natural world and it was not being properly accounted for in our market economy, nor in our ex post efforts as economists to try to measure the market economy. And so it's this idea that natural capital, as economists call things like trees and fish and ecosystems, natural capital is an important contributor to economic growth and development, often depending on where countries are in their growth stage. But in this case, we're talking about a very large contribution to what was at the time, early 1800s to middle 1800s, a rapidly growing economy. So three things. The transition, resource scarcity, and how?

how we value natural capital. I guess there's also the aspect of the informal economy as well, right? And this is a debate that still comes up today, which is how do you value the work that people are doing just without being paid, right? So if you're a caregiver for a family member or something like that, that's something that clearly is producing an economic outcome, but is not necessarily covered in the official GDP statistics and things like that. What lessons can we learn, I guess, when it comes to the informal economy and how we actually measure that? So a couple things. Fifty-plus years ago, one of my advisors when I was getting my PhD, a guy named Bill Nourndhaus who won the Nobel Prize and shared the Nobel Prize for Economics

in 2018, wrote a paper with James Tobin, also a Nobel Prize winner, on this exact topic, right? So how do we improve measures like GDP to take into account? natural capital, which I just mentioned, but also home production and the value of leisure time. And so home production is central to the valuation conundrum that is associated with firewood, produced in the home, often used in the home, at times marketed through the formal economy, and then increasingly done so. So it raises those issues in a very central way. I will say that some of the online discussions of this paper that I've been made aware of raise a very important point, which is, you know, if you're going to compare the value of firewood production and consumption

to existing measures of GDP, which is largely the within market version of economic output, then you should also measure all the valuable things that happen in the home, cleaning, cooking, mending clothes, constructing homes and barns and all the things that happened back in this historical period. And that's absolutely true. The right measure would include all those things. I would just consider that the effort to measure firewood is an effort to push the boulder up the hill, right, to get us from measuring GDP in the strictly market sense towards that measure that includes these other important determinants of social welfare. I have just one more question. and it sort of follows very nicely from the point you just made.

But do you think this type of research, this type of data gathering would have been possible, say, 10 years ago? I know you mentioned that you used software to word scrape a bunch of documents, old documents that would have been uploaded into, you know, a library system or a central database or something like that. Could you have done this just 10 years ago? So aspects of it, probably, but it would have been much. more laborious because the data sources probably would have been on microfilm or something like that. And so the hours required to gather a certain number of price quotes would have been considerably higher. But 20 years, 15 or 20 years, I don't really think so. I mean, there's a bunch of, I don't even know quite how to properly refer to them. So archives maybe is the best way to put it that are fully online.

they are made available through university subscription services, and they're literally images of very old texts. The probate records, for instance, that comprise the very early price series were all in those sources. I didn't go to records in Salem, Massachusetts. I found it all online. And that is a reserve of information or data that would not have been possible to collect prior to. community's efforts to digitize and make public that information. So I guess my answer, the short version of my answer is, would it have been possible 10 years ago? Some small version of it, yes, at much higher time expense, but 15 or 20 years ago, I don't think so. I find this so

interesting because now I'm thinking about all the new data sources that we're going to find thanks to digitization and AI and all of that stuff and the impact on how we understand the economy. But we're going to have to leave it there. Nicholas Mueller, thank you so much for coming on all thoughts. Really enjoyed speaking with you and really enjoyed the paper. Thank you. Yeah, that was great. Thank you so much for having me. It's been a pleasure. Joe, I love that conversation. I love doing these sort of single topic episodes because it just opens up all these avenues that you haven't necessarily thought that much about before. Totally. Well, there's a lot in there. You know, one place to start. I mean, there's a lot. The idea of like railroads as the source of like

price convergence. It's very intuitive, obviously, right? But it's still interesting to see, like, how often this pattern gets repeated over and over again through commodity history. Obviously, these days, you know, the story is much more with natural gas pipelines and the attempts to arbitrage spreads between, you know, there's not one unified natural gas price the way there is an oil precisely because of these transportation networks. Maybe there will be at some point with enough pipelines. That's one story that you see repeated over and over again throughout commodities. Yeah. I also just think the point about the energy transition, which we've discussed with Bob Brackett before, as you mentioned, this idea that we have a notion in our minds often that, like, suddenly a new commodity comes on the scene and everyone switches over really quickly. But actually, we have lots and lots of historical examples of the process taking a lot longer than you would think. And I think Bob used the example of Mercury. And now we have another example in the form of firewood. I certainly was not expecting to hear that part about yet another Firewood price bike of the 1970s.

And in 2008. Yeah. Like in my mind, it's like, okay, the story probably ends somewhere around the late 1800s. And so the fact that 100 years later and then, you know, another 30 or 40 years later, it's visible again. I also think maybe like, weren't there some stories about using Firewood like in 2022 after Russia's invasion of Ukraine? I can't remember for sure, but I feel like I remember hearing some stories about parts of Europe, you know, burning fire, burning wood again for heat. So, yeah, it's really hard to actually fully ever displace a commodity except oil oil and to ban. I have to say my personal preference when it comes to BTUs now that I've done coal and wood has to be wood.

Truly renewable resource that won't coat your entire house in like a dusty black. film. So yeah, go wood. Go wood. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Lots podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Wisenthall. You can follow me at The Stallwart. Follow our producers, Carmen Rodriguez at Carmen Armand, Dashobinette at Dashbot and Kale Brooks. For more odd lots content, go to Bloomberg.com slash odd lots. We have the daily newsletter and all of our

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