Definition of Misery Index



What does the term "misery index" mean? What is the definition of the term "misery index"?

The "misery index" was created by economist Arthur Okun.

To calculate the current "misery index", simply add the current unemployment rate with the current rate of inflation.

So, if the unemployment rate is currently 8.8% and the rate of inflation is 3.1%, then the misery index will be 11.9 (8.8 + 3.1 = 11.9).

Misery Index DefinitionA high "Misery Index" means that the country is currently suffering through a high rate of "stagflation", which is weak economic activity coupled with a high rate of inflation.

The highest "Misery Index" number on record was posted back in 1980 (21.98).

In an ideal economic environment (low unemployment rate coupled with low rate of inflation), the "Misery Index" would be around 7-8.

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