5 ms·

Hmm. How many computers or iPhones or cars or televisions or bicycles could I have bought in 1635 with one US dollar. Come to think of it, where would I have go

by sib 5y ago

Hmm. How many computers or iPhones or cars or televisions or bicycles could I have bought in 1635 with one US dollar. Come to think of it, where would I have gotten a US dollar in 1635? (And yes, I've studied lots of economics and understand price deflators, inflation, etc.; the point is, these comparisons don't really make sense over extended periods of time like this.)

101008 5y ago
Yeah, I agree. Coming from a country with a lot of inflation, it doesn't make sense if you don't show salaries as well. It's true, a US dollar could buy more things in the past, but salaries weren't as high as now. A better relationship would be what could you buy with a average salary, for example, or how many salaries you needed to buy a house back then.
jiofih 5y ago
There are extensive records[1] available, average wage in the 1700s was about $20/week, highest up to $250/week. That translates to a range of $1200 - $15000 / week in today’s dollars according to the value chart. A pair of shoes would cost something like $1. A slave, $400. https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1up&seq=228 https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1...
GolDDranks 5y ago
Forgive me for an ignorant question, since I haven't studied economics: how are is the purchasing power calculated over time then? Here's my naive/intuition based attempt to guess how it works: If it varies as a continuous function, and small increments are measurable/well-defined (i.e. stuff like TV's and iPhones don't get invented as point-like events enough to screw the continuity), one could think that treading back increment by increment and then taking a limit would yield a valid time series. Then, everything outside that time series would not be indicative of the purchasing power of dollar, but the price of that specific good or service. Does my reasoning make sense?
- ghaff 5y ago
  To quote the BLS: CPI is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." That market basket gets changed over time which makes comparisons harder and harder over time because you're buying things that were maybe "typical" for those two points in time but are very different. Imagine telecoms and entertainment costs for a typical 1970 consumer vs. today.
ghaff 5y ago
>these comparisons don't really make sense over extended periods of time like this Yeah. It's probably useful in something like a magazine article or book to give a sense for how someone in 1800 would have viewed a $20 bill in purchasing power. But you go back a century or so and the basket of goods you're comparing look so much different. And behaviors are also just a lot different. Most middle class people in the US won't have a cook but they have tons of dining and take-out options. Just to give one example.
hogFeast 5y ago
As another comment has said, you realise that there is fairly substantial records on wages, prices. I am sure you have studied economics, have you studied economic history though? The data is pretty solid. The issue with consumer baskets has become more difficult but only in the recent past where the quality of goods is often hard to compute. But historical data is much more solid because the relevant consumer basket changed relatively little.
- sib 5y ago
  Yup. I actually was a research assistant for a university professor who specifically studied economic history, price changes, and the econometric models that could be built from them, etc. The problem is that the basket of goods is so different that it's largely irrelevant too compare them. Even a pair of shoes, which certainly existed in the 1600's, can't exactly be compared to the shoes (quality or variety) that we have today.
  - hogFeast 5y ago
    Again, for most of the sample in the OP, it isn't the case that consumer basket is unchanged. Most of the world didn't move out of subsistence living until relatively recently. Their consumption basket was basically identical to someone living five centuries ago, and this was true for almost all of the period in question. It is also interesting to ask: if what you are saying is true, then what do you think economic history is? There are thousands of price series which do what you say is impossible. To a large extent, the data that we have going back to the 15th century (and beyond) is the study of prices and population. All of the products that people consumed then, they consumed now. Saying that shoes have somehow evolved beyond the comprehension of someone living in the 15th century is...odd. And btw, this makes no difference at all for this question in any functional sense. No-one believes that if you devised some perfect consumer basket that it would show that the dollar actually maintained value...that makes no sense. Complaining about the change in quality is something that has become very trendy but this is the least relevant part of the problem. It is an issue when you look at certain products (particularly telecoms) but this isn't really relevant for OP.
Scott_Sanderson 5y ago
True but couldn't some good be compared like the cost of housing, food, clothes, etc.?
- sib 5y ago
  Yes - although what would be completely acceptable for a well-off person to live in in 17th-century North America wouldn't come close to meeting building codes today. It wouldn't even have plumbing, electric power, indoor toilet, true insulation, etc. And it would be tiny. So can you really compare it as though they are both "housing"?
- aeternum 5y ago
  Even with those items, they have changed significantly. For example, how do you compare the value of a house that has indoor plumbing, electricity, central hvac to an old house without those things? If the price of the modern house is 2x the old house, should it be attributed to inflation or a higher intrinsic value?
  - vel0city 5y ago
    Right? These days it's so much more expensive to pay a doctor to bleed you to cure the evils in your blood, and trying to find an available apothecary to sell you medicinal mercury at a good price is darn near impossible these days.

by sib 5y ago

101008 5y ago

Yeah, I agree. Coming from a country with a lot of inflation, it doesn't make sense if you don't show salaries as well. It's true, a US dollar could buy more things in the past, but salaries weren't as high as now. A better relationship would be what could you buy with a average salary, for example, or how many salaries you needed to buy a house back then.

jiofih 5y ago

There are extensive records[1] available, average wage in the 1700s was about $20/week, highest up to $250/week. That translates to a range of $1200 - $15000 / week in today’s dollars according to the value chart. A pair of shoes would cost something like $1. A slave, $400. https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1up&seq=228 https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1...

GolDDranks 5y ago

Forgive me for an ignorant question, since I haven't studied economics: how are is the purchasing power calculated over time then? Here's my naive/intuition based attempt to guess how it works: If it varies as a continuous function, and small increments are measurable/well-defined (i.e. stuff like TV's and iPhones don't get invented as point-like events enough to screw the continuity), one could think that treading back increment by increment and then taking a limit would yield a valid time series. Then, everything outside that time series would not be indicative of the purchasing power of dollar, but the price of that specific good or service. Does my reasoning make sense?

ghaff 5y ago
To quote the BLS: CPI is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." That market basket gets changed over time which makes comparisons harder and harder over time because you're buying things that were maybe "typical" for those two points in time but are very different. Imagine telecoms and entertainment costs for a typical 1970 consumer vs. today.

ghaff 5y ago

>these comparisons don't really make sense over extended periods of time like this Yeah. It's probably useful in something like a magazine article or book to give a sense for how someone in 1800 would have viewed a $20 bill in purchasing power. But you go back a century or so and the basket of goods you're comparing look so much different. And behaviors are also just a lot different. Most middle class people in the US won't have a cook but they have tons of dining and take-out options. Just to give one example.

hogFeast 5y ago

As another comment has said, you realise that there is fairly substantial records on wages, prices. I am sure you have studied economics, have you studied economic history though? The data is pretty solid. The issue with consumer baskets has become more difficult but only in the recent past where the quality of goods is often hard to compute. But historical data is much more solid because the relevant consumer basket changed relatively little.

sib 5y ago
Yup. I actually was a research assistant for a university professor who specifically studied economic history, price changes, and the econometric models that could be built from them, etc. The problem is that the basket of goods is so different that it's largely irrelevant too compare them. Even a pair of shoes, which certainly existed in the 1600's, can't exactly be compared to the shoes (quality or variety) that we have today.
- hogFeast 5y ago
  Again, for most of the sample in the OP, it isn't the case that consumer basket is unchanged. Most of the world didn't move out of subsistence living until relatively recently. Their consumption basket was basically identical to someone living five centuries ago, and this was true for almost all of the period in question. It is also interesting to ask: if what you are saying is true, then what do you think economic history is? There are thousands of price series which do what you say is impossible. To a large extent, the data that we have going back to the 15th century (and beyond) is the study of prices and population. All of the products that people consumed then, they consumed now. Saying that shoes have somehow evolved beyond the comprehension of someone living in the 15th century is...odd. And btw, this makes no difference at all for this question in any functional sense. No-one believes that if you devised some perfect consumer basket that it would show that the dollar actually maintained value...that makes no sense. Complaining about the change in quality is something that has become very trendy but this is the least relevant part of the problem. It is an issue when you look at certain products (particularly telecoms) but this isn't really relevant for OP.

Scott_Sanderson 5y ago

True but couldn't some good be compared like the cost of housing, food, clothes, etc.?

sib 5y ago
Yes - although what would be completely acceptable for a well-off person to live in in 17th-century North America wouldn't come close to meeting building codes today. It wouldn't even have plumbing, electric power, indoor toilet, true insulation, etc. And it would be tiny. So can you really compare it as though they are both "housing"?
aeternum 5y ago
Even with those items, they have changed significantly. For example, how do you compare the value of a house that has indoor plumbing, electricity, central hvac to an old house without those things? If the price of the modern house is 2x the old house, should it be attributed to inflation or a higher intrinsic value?
- vel0city 5y ago
  Right? These days it's so much more expensive to pay a doctor to bleed you to cure the evils in your blood, and trying to find an available apothecary to sell you medicinal mercury at a good price is darn near impossible these days.