The Great Recession Index: A Place-based Indicator for Countries, States, and Metropolitan Areas

Abstract

The Great Recession (GR) of 2007–2009 marked the most devastating economic downturn since the Great Depression of the 1930s, and its consequences dramatically changed almost every aspect of social life. This research introduces the Great Recession Index (GRI), a place-based composite measure that captures the multidimensional nature of the GR. The GRI can be used to examine macro-level outcomes and is especially well-suited for examining the spatial variation and longterm effects of the GR. The GRI is adaptable to a variety of geospatial units of analysis, and in this article, we develop measures for countries, U.S. states, and U.S. metropolitan areas. Then, using the state-based GRI, we provide a research application to demonstrate the utility of the GRI for explaining state-level income inequality in the post-Recession period. The results show that the initial shock of the GR decreased the income share of upper-class households, but the aftershock of the Recession increased their income share, resulting in increased income inequality in the U.S. since the Recession. This paper concludes by considering the feasibility of using similar measures for evaluating the effects of catastrophic events such as wars, civil unrest, climate change, natural disasters, or pestilence on societal outcomes.