Ever hear of interesting economic indicators such as the correlation between the economy and length of skirts? Here’s one urbanists should appreciate: the skyscraper index, which shows strong correlation between the completion of world’s tallest buildings and downturns in the business cycle. Mark Thornton discusses the skyscraper index in his article, Skyscrapers and Business Cycles [or mp3 read by the author], which was originally published in the Quarterly Journal of Austrian Economics: The skyscraper is the great architectural contribution of modern capitalistic society and is even one of the yardsticks for 20th-century superheroes, but no one had ever really connected it with the quintessential feature of modern capitalistic history — the business cycle. Then in 1999, economist Andrew Lawrence created the “skyscraper index” which purported to show that the building of the tallest skyscrapers is coincidental with business cycles, in that he found that the building of world’s tallest building is a good proxy for dating the onset of major economic downturns. Lawrence described his index as an “unhealthy 100 year correlation.” Introduction Do Skyscrapers Predict? Table 1: Skyscrapers and Economic Crisis Figure 1: Skyscrapers and Economic Crisis Cantillon Effects in Skyscrapers Cantilloned Buildings and Business Cycles When the Skyscraper Index Is Wrong References Notes While macro business cycle theory is beyond my core strength in economics and the scope of this blog, this is a particularly interesting topic to me as I am an economics enthusiast with a passion for tall buildings. The basic premise is that construction of worlds tallest buildings has strong corelation with economic downturns. Construction of these buildings begin during times of economic expansion towards the peak of business cycles. However, by the time the buildings are complete, the market has taken a turn for the worse. Could the Burj Dubai be an indicator that tough times are […]
