Simultaneous Transfer Function Analysis of Okun's Misery Index: Improvements in the Economic Quality of Life through Maharishi's Vedic Science and Technology of Consciousness

This paper analyzes the time series behavior ofOkun's economic "misery index, "defined as the sum of the monthly inflation rate and unemployment rate, for the U.S. during the period 1979 to 1988. The misery index provides a useful summary measure of macroeconomic performance and the economic dimension of the quality of life. Using Liu 's linear transfer function (LTF) approach to the identification of multiple-input transfer function equations, augmented by the use of the AIC criterion in model identification, we identify and estimate a three-equation simultaneous transfer function (STF) model of the misery index, monetary growth, and the rate of change of crude materials prices. The multiple time series model is used to assess the major factors contributing to the dramatic reversal in the early 1980s of the historical upward trend of the index. The principal focus of the empirical analysis is to examine the role of a key explanatory factor suggested by a field theory of consciousness and human behavior proposed by Maharishi Mahesh Yogi. The theory predicts that the collective practice of the Transcendental Meditation and TM-Sidhi program by a single group comprising the square root of one percent of the national population will lead to a measurable improvement in the quality of life of the whole society. Full information maximum likelihood estimates of the system of dynamic reduced-form equations found sizeable and highly significant effects of the field-theoretic variables in reducing both the misery index (p = 8. 7 x 10 -) and the growth of crude materials prices (p = 2.6 x 1 o-5) after allowing for the dynamic interaction of the misery index, monetary growth, and the rate of change of crude materials prices. For a TM-Sidhi group of 1700 or more in size, the estimated long-run reduction in the misery index was 62.4 percent of the total decline of the index from its peak in 1980 to the end of the sample period in 1988. A likelihood ratio test indicates that the joint null hypothesis of no field effects of consciousness on all three economic variables must also be strongly rejected for these data (p = 1.6 x 1(F). The empirical analysis also found a significant positive effect of crude materials prices on the index, and a significant positive effect of money growth on crude materials prices.