3 ms·
It's difficult to compare amounts between different cultures/countries/times because money is an abstraction. To the extent people spend on the same things, you
by ikeboy 11y ago
It's difficult to compare amounts between different cultures/countries/times because money is an abstraction. To the extent people spend on the same things, you can compare how much each costs, but many of the things previous generations spent on are either viewed as useless by us, or are considerably cheaper. (Although even "cheaper" is subjective: we can point to abundance, or marginal cost to produce in labor or similar more objective metrics to get around that).
I tend to consider all such statements spanning a sufficiently large time as guesses.
(For other countries, you need to consider different cost of goods even when money can be directly converted; you need to consider what's provided by the government as a cost-of-living deduction, and plenty of other stuff. It's like comparing interest rates without mentioning the money float or gold standard when they differ among the two periods you're comparing.)
/rant
- cs702 11y agoIn general, I agree. In this case, the percent-of-GDP approach used by the Economist is probably a good one, because (1) it relies on high-quality data (the Bank of England, founded in 1694, provides GDP data going back three centuries[1]), and (2) it measures the bond's size in relation to the size of Britain's overall economy, which intuitively makes more sense for financial-market figures. [1] http://www.bankofengland.co.uk/research/Pages/onebank/threecenturies.aspx http://www.bankofengland.co.uk/research/Pages/onebank/threec...
- barrkel 11y agoOn a time scale of centuries, the only real way to compare money is by the effect it has on other people when you spend it (i.e. how much effort other people expend when you draw down the claim on future production that money represents). You can look at the percentage of the population / economy affected (for large amounts of money), or the absolute number of people affected (typically measured against of the average wage). When the size of the population overall is changing, numbers calculated using the two basic techniques will necessarily diverge. Which number is more important depends on whether you're interested in relative or absolute purchasing power, which is context dependent.