Jevons Sunspots and Commercial Activity

Sunspots and Commercial Activity

Jevons's romance with statistical investigations unfortunately carried him to the most fanciful and, unfortunately, the most ridiculed idea of his life, the explanation of commercial crises on the basis of the periodic alteration of spots on the sun. The "sunspot theory" integrated Jevons's earlier work on prices with his lifelong inter­est in astronomical and meteorological phenomena. In "The Solar Period and the Price of Corn" (1875), he put the matter succinctly:
If the planets govern the sun, and the sun governs the vintages and harvests, and thus the prices of food and raw materials and the state of the money market, it follows that the configurations of the planets may prove to be the remote causes of the greatest commercial disasters (Inves­tigations, p. 185).

Jevons's meteorological research had convinced him that the sunspot period was 11.11 years in length. Parts of James E. Thorold Rogers's great work, A History of Agriculture and Prices in England, had begun to appear, giving Jevons a source of raw data. But in 1875, Jevons did not believe that the information he had in hand justified a firm belief in a causal relation between sunspots and commercial activ­ity. Still, in noting that the electric telegraph was a favorite dream of sixteenth- and seventeenth-century physicists, Jevons pointed out:

It would be equally curious if the pseudo-science of astrology should, in like manner, fore­shadow the triumphs which precise and methodical investigations may yet disclose, as to the obscure periodic causes affecting our welfare when we are least aware of it (Investigations, p. 186).
In 1878 Jevons returned to the subject of sunspots with renewed vigor, first in a paper to the British Association ("The Periodicity of Commercial Crises and Its Phys­ical Explanation") and then in an article in Nature ("Commercial Crises and Sun-Spots"). Jevons was convinced by new evidence that the duration of the sunspot cycle was 10.44 years instead of 11.11, a dating that more closely correlated with the com­mercial cycle of crises. The coincidence was just too much for Jevons, and he lunged to a conclusion:

I can see no reason why the human mind, in its own spontaneous action, should select a period of just 10.44 years to vary in. Surely we must go beyond the mind to its industrial environment. Merchants and bankers are continually influenced in their dealings by accounts of the success of harvests, the comparative abundance or scarcity of goods; and when we know that there is a cause, the variation of the solar activity, which is just of the nature to affect the produce of agriculture, and which does vary in the same period, it becomes almost certain that the two se­ries of phenomena, credit cycles and solar variations, are connected as effect and cause (In­vestigations, p. 196).

Unfortunately, Jevons appeared to have let a coincidence drag him into an untenable and rigid position. How were alterations in harvests transmitted mio commercial cy­cles? Although he had dealt with European experience in the earlier paper, Jevons now argued that the impact on money and commercial markets in England was through foreign trade with India and the Orient. Periodic crises in Indian harvests would alter prices of raw produce and the nature of England's trade balance. In his 1875 paper, Jevons had emphasized the "psychic" determinants—optimism, de­spondency, panic, etc.—of the trade cycle, and he had tried to relate them to oscil­lations in the price of food. Now Jevons abandoned these psychic effects in the "trans­mission mechanism" and emphasized merely the coincidence of high prices in India and commercial crises in England. But Jevons himself noted the major problem with such an argument: that if the cause of commercial crises in England was the high price of agricultural produce in India, a lag between high prices and crises would be expected or even required. None could be observed. In short, some explanation of the relation or transmission was needed, but Jevons offered none. His theory drawn from his study of the available data was simply incomplete. Astronomers returned to a 11.11 -year sunspot cycle, moreover, and while the idea probably had some merit in primarily agrarian societies, it is now believed that the determinants of the trade cycle are far more complex than Jevons (or other early writers) thought.

In spite of the "sunspot episode," Jevons's overall statistical work deserves very high marks. The scientific spirit of the attempt to discuss the causes of economic phe­nomena permeates Jevons's empirical work, and his study of price series will for­ever stand as a monument and as an example to those concerned with economics and empiricism. In fact, Jevons is recognized as one of the spiritual forefathers of econo­metrics (see the box, The Force of Ideas: Jevons and the Origins of Econometrics).