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Yohan @yohan.so · 29/04/2025

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Yohan @yohan.so · 29/04/2025

𝘁𝗹;𝗱𝗿 1. nightlights can capture certain elements of consumption and production 2. the level of granularity when using nightlights really matters

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Yohan @yohan.so · 29/04/2025

𝗧𝗵𝗲 𝗸𝗲𝘆 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆: The more you zoom in, the bigger these spatial mismatches between daytime and nighttime economic activity become.

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Yohan @yohan.so · 29/04/2025

This underrepresentation occurs even if: • these areas generate a lot more economic activity (e.g. financial districts), compared to • areas bustling with bars and restaurants These nightlife areas tend to be overestimated in nightlights data.

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Yohan @yohan.so · 29/04/2025

As a result, it's likely that I: • work during the day in one 500m2 pixel and • spend money in a different pixel at night. This implies that pixels with higher daytime economic activity will be systematically underrepresented in nightlights data.

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Yohan @yohan.so · 29/04/2025

This creates a discrepancy between areas where economic activity is generated during the day (London) vs at night (Essex). With nightlights we can zoom into areas as small as 500m2.

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Yohan @yohan.so · 29/04/2025

In this example, the economic activity from my job in London doesn't get picked up by nightlights. However, the places where I spend money at night in Essex, like restaurants, do light up and are visible from space.

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Yohan @yohan.so · 29/04/2025

2. Spatial Mismatches Imagine I work in London but live in Essex, an hour away. My work (i.e. production) contributes to London's economy. But when I spend time in Essex, like eating out at night, that's where my consumption mainly happens.

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Yohan @yohan.so · 29/04/2025

The bottom line: Nightlights can capture certain elements of consumption AND production. So when doing an analysis using nightlights, we need to know the composition of production and consumption. This is important to avoid double counting.

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Yohan @yohan.so · 29/04/2025

See this image of the Pilbara region in Australia Here we see: 1. lights generated from mines being lit up at night (i.e. production-based economic activity), AND 2. lights generated by mining staff who are eating out at night (e.g. consumption-based economic activity).

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Yohan @yohan.so · 29/04/2025

But the reality is a bit more complex. Nightlights can capture some production-related activities. E.g. nighttime construction and nighttime mining.

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Yohan @yohan.so · 29/04/2025

However, we need to be careful about double counting. E.g. combining production values with income and consumption figures without accounting for overlaps could distort things. Henderson et al., essentially view nightlights as a measure of nighttime consumption:

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Yohan @yohan.so · 29/04/2025

However, GDP is typically measured in three ways: 1. Adding up all of the consumption in an economy 2. Adding up all of the income earned in an economy 3. Adding up the value of all things produced in an economy For an entire country, these should equal one another.

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Yohan @yohan.so · 29/04/2025

1. Economic Activity It’s vague to say nightlights capture ‘economic activity’. What 𝙚𝙭𝙖𝙘𝙩𝙡𝙮 do we mean by economic activity? The most popular paper on nightlights and economic activity is Henderson et al. (2012). It uses nightlights as a proxy for real GDP growth.

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Yohan @yohan.so · 29/04/2025

If you're using nightlights you need to know about two things: 1. What 𝙩𝙮𝙥𝙚 of economic activity it captures, and 2. 𝙎𝙥𝙖𝙩𝙞𝙖𝙡 𝙢𝙞𝙨𝙢𝙖𝙩𝙘𝙝𝙚𝙨 Here's the breakdown (in simple terms):