Economic Growth and the Use of Material Resources

Columbia University, New York NY

Investigators

Abstract

This award funds a research project that examines the long-run relationship between material resource usage and economic growth in the United States. It challenges the conventional view that rising living standards inevitably demand increasing material consumption. By integrating theoretical insights with data analysis, the project investigates the mechanism and the impacts of material efficiency in aggregate production. Its theoretical and empirical examination of material efficiency from the macroeconomic perspective represents a novel and major contribution to literature. One of the main contributions of this award is that it constructs a real, chain-weighted index of over 150 raw material inputs—spanning energy, major and minor metals, biological commodities, and construction materials— to document material consumption since the early 1970s in the United States. This project is important for understanding how innovations in material-saving technologies affect macroeconomy, public welfare, and development. Material-use efficiency underpins many advanced manufacturing technologies and supports translation research. The research on material usage carries profound implications for economic growth and national security. The research work could advance scientific understanding of resource efficiency, support workforce development by creating open-access data and tools for researchers and educators, and inform decision makers to promote a resilient, prosperous US economy. Ultimately, the research findings could help the United States develop more efficient production and material-use strategies, improve citizens’ wellbeing, and strengthen its dominant position in the global economy. This award funds a research project with two integrated phases. In the first phase, the project develops a harmonized historical database of material inputs into the U.S. economy, drawing on quantity and price series from the U.S. Geological Survey, the Energy Information Administration, the Bureau of Economic Analysis, and archival sources. Real, chain-weighted input indices are calculated and mapped through harmonized, expanded input-output tables into consumption and investment sectors. Preliminary analysis of these data reveals two distinct eras: rapid material-intensive growth through mid-century, followed by persistent “degrowth” of material throughput since 1970. In the second phase, the project introduces a structural macroeconomic model that combines non-homothetic constant-elasticity-of-substitution (CES) preferences with directed technical change across material and labor inputs. The model endogenizes innovative choices by representing firm-level production efficiencies as Pareto-distributed draws and allows expenditure shares to vary flexibly with income via sector-specific income elasticities estimated from the Consumer Expenditure Survey. Sectoral elasticities of substitution and technology parameters are identified using Bureau of Labor Statistics price data, industry markups, and productivity statistics. Counterfactual simulations decompose the observed decline in material throughput into five channels: classical factor substitution, material-saving technical change, shifts in sectoral expenditure patterns toward less material-intensive services, changes in trade patterns that offshore embodied resource use, and a residual component capturing unobserved factors. The anticipated deliverables include a publicly accessible database of historical material-input series; expanded, time-consistent input-output tables; estimates of key preference and technology parameters; and a rigorously identified decomposition of U.S. dematerialization. The results could inform decision makers for both national defense and economic well-being by assessing resilience under resource scarcity, and support long-run prosperity by identifying leverage points for resource-efficient technological innovation. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.