In the late 19th century, a British physiologist by the name of John Scott Haldane suggested that miners carry a small animal with them as they traverse down the mines.

Whilst this was far from a new concept, Mr Haldane highlighted the risks that caused canaries and other small birds to die sooner than humans from the same health hazards caused by carbon monoxide poisoning. 

Prior to the invention of carbon monoxide detectors in the 1980s, Mr Haldane’s studies saved countless lives and created the concept of the “canary in the coalmine”, or a relatively small issue that illustrates the potential for a larger danger.

An interesting example that has been proposed in recent years is the cardboard box index, which is the idea that custom cardboard boxes are not just important for an individual rollout but could be an informal indicator of larger buying trends.

What Does The Cardboard Box Index Measure?

The cardboard box index is, as the name describes, the overall production output of cardboard boxes.

Typically, it is used to measure the production of standard corrugated cardboard boxes, most commonly the regular slotted container (RSC), the most commonly used cardboard box in the world for packaging and shipping.

Why Are People Interested In Cardboard Box Production?

The cardboard box index is not the only informal measure that has entered common parlance.

The Big Mac index is a measure of the cost of the eponymous McDonald’s burger across different regions in order to provide a more accurate measure of actual buying power across regions in real terms using a singular universal measure.

Similarly, the Waffle House Index was an informal measure of the severity of a national disaster. As the eponymous restaurant is unusually prepared for extreme weather conditions, if it has a limited menu or has closed entirely, it is a sign that an area has been particularly affected.

In a similar vein, the cardboard box index is an early indicator of manufacturing confidence in consumer goods, as producing a lot of cardboard boxes suggests that manufacturing is set to increase and vice versa.

The logic is that the production of cardboard boxes could be used as a leading indicator of economic growth or recession before the official gross domestic product figures are published.

If there are more boxes being produced, more products are being made, packaged and shipped, which itself suggests that more people are buying products.

By contrast, if box manufacturers are reducing production, particularly in significant quantities, it could be a potential early sign of a recession on the horizon.

A study published by Virginia Tech University suggested that a particularly steep drop in production, such as the nine per cent reduction seen in the United States, could be a potential sign of an economic recession.

Economist Jadrian Wooten noted that this was the highest drop since 2008, following a major financial collapse that triggered the Great Recession.

How Reliable Is It As An Indicator? 

The most important measure of an economic indicator, informal or otherwise, is how well it reflects the wider trends that people claim it does.

The Big Mac index was considered by several economists to be mostly accurate and at least comparable to the basket of goods used to measure inflation.

Similarly, the Waffle House index typically highlighted areas of particular crisis, and so became informally used for a time by the US Federal Emergency Management Agency, the country-wide authority in charge of disaster relief.

Unfortunately, the cardboard box index, by itself at least, is too volatile to be used as a singular metric.

There are a lot of different variables that affect cardboard box production, such as cost of production, supply of raw materials and disruptions in the supply chain.

As well as this, cardboard box production is not necessarily an indicator of a healthy economy, as the measure does not distinguish between the types of goods stored and shipped across.

This means that the results are rather inconsistent and can at times even lag behind GDP figures.

Despite this, it is a useful rule of thumb and can be used alongside indicators of economic confidence.

These include tonnage of freight carried (reflecting goods shipped), production of metal (used in a large number of products), the use of public transport in urban areas (indicator of job health), entertainment spend (indicator of disposable income) and the production of waste per household (indicator of goods or discarded to free up space).

These indicators, in conjunction with the cardboard box index, could provide insight into the wider health of the economy and act as a canary in the coalmine.