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Here's some quick math. The price of a model T in 1908 was $825 or $850 (google results vary). The median annual income was between $450 and $525 (again, sourc

Here's some quick math. The price of a model T in 1908 was $825 or $850 (google results vary). The median annual income was between $450 and $525 (again, sources vary). So a Model T cost 1.6 to 1.7 times the median income of a US worker. For a car that had no air conditioning, no radio, no airbags, and a top speed of 45 mph. Near the end of the production run (mid-late 20s) the cost of the model T had gone down by over half - thanks to production line manufacturing. This site provides a breakdown for the cost as a fraction of median annual income of Chevys over the course of the 20th century: https://cars.lovetoknow.com/Car_Ownership_Statistics https://cars.lovetoknow.com/Car_Ownership_Statistics By comparison, the current US median income is just over $60k. You can buy many of these cars for less than half of that. Some less than a third: https://www.truecar.com/prices-new/kia/ https://www.truecar.com/prices-new/kia/ Each of these cars is drastically safer, more comfortable, and with amenities like aircon radios and more.

devonkim 7y ago
Almost all the price-market comparisons from decades ago forget utility value of monetary and the shifting of disposable income for non-essential goods and services. Houses then cost the equivalent today of perhaps $80k as well. A better comparison may be around disposable income though which at the national average household income of about $70k to be a safe $15k, so cars should be about $20k. Except new car sale prices nowadays are about $30k and yet we know that most people making $70k for a family of four probably aren’t going around getting a new car. Elizabeth Warren’s paper from a decade or two ago did a fair job doing some pricing comparisons of the day to turn of the century American household microeconomics and demonstrated the primary change in the past 100 years was the additional cost of a second bathroom.
- manfredo 7y ago
  And what was the disposable income in 1908 when the median us income was $500. If buying a $30k car is out of reach for a family making $70k a year, then I find it exceedingly hard to believe that a family making $500 in 1908 would be able to afford an $800 car. Microeconomic comparisons are very easy to tweak to achieve a conclusion determined a priori. Some goods and services like electronics, air travel, communication, and transport become orders of magnitude cheaper over the course of the 20th century. Others like healthcare and housing on average get more expensive, especially in the latter half of the 20th century. If you want to show lowering costs of living, weight the model towards the former. If you want to show a higher cost of living, weight the model towards the latter.

devonkim 7y ago

Almost all the price-market comparisons from decades ago forget utility value of monetary and the shifting of disposable income for non-essential goods and services. Houses then cost the equivalent today of perhaps $80k as well. A better comparison may be around disposable income though which at the national average household income of about $70k to be a safe $15k, so cars should be about $20k. Except new car sale prices nowadays are about $30k and yet we know that most people making $70k for a family of four probably aren’t going around getting a new car. Elizabeth Warren’s paper from a decade or two ago did a fair job doing some pricing comparisons of the day to turn of the century American household microeconomics and demonstrated the primary change in the past 100 years was the additional cost of a second bathroom.

manfredo 7y ago
And what was the disposable income in 1908 when the median us income was $500. If buying a $30k car is out of reach for a family making $70k a year, then I find it exceedingly hard to believe that a family making $500 in 1908 would be able to afford an $800 car. Microeconomic comparisons are very easy to tweak to achieve a conclusion determined a priori. Some goods and services like electronics, air travel, communication, and transport become orders of magnitude cheaper over the course of the 20th century. Others like healthcare and housing on average get more expensive, especially in the latter half of the 20th century. If you want to show lowering costs of living, weight the model towards the former. If you want to show a higher cost of living, weight the model towards the latter.