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> An interesting point raised in the NPR piece is that sometimes your basket stays the same at the same price, but the content is actually inferior in subtle an

> An interesting point raised in the NPR piece is that sometimes your basket stays the same at the same price, but the content is actually inferior in subtle and not so subtle ways. And sometimes the content is actually superior. A US$ 30K nowadays is generally much better than a similarly priced car from 10 or 20 years ago. The iPhone was released in the United States in 2007 at the price of $499 for the 4 GB model and $599 for the 8 GB model: what kind of tech can you get for the same prices nowadays? Everyone seems to ignore deflation, especially due to technology. This 1991 Radio Shack add illustrates the point quite well IMHO: > There are 15 electronic gimzo type items on this page, being sold from America’s Technology Store. 13 of the 15 you now always have in your pocket. > So here’s the list of what I’ve replaced with my iPhone. > * All weather personal stereo, [*US*]$11.88. I now use my iPhone with an Otter Box. > * AM/FM clock radio, $13.88. iPhone. > * In-Ear Stereo Phones, $7.88. Came with iPhone. > * Microthin calculator, $4.88. Swipe up on iPhone. > * Tandy 1000 TL/3, $1599. I actually owned a Tandy 1000, and I used it for games and word processing. I now do most of both of those things on my phone. > * VHS Camcorder, $799. iPhone. > * Mobile Cellular Telephone, $199. Obvs. > * Mobile CB, $49.95. Ad says “You’ll never drive ‘alone’ again!” iPhone. > * 20-Memory Speed-Dial phone, $29.95. > * Deluxe Portable CD Player, $159.95. 80 minutes of music, or 80 hours of music? iPhone. > * 10-Channel Desktop Scanner, $99.55. I still have a scanner, but I have a scanner app, too. iPhone. > * Easiest-to-Use Phone Answerer, $49.95. iPhone voicemail. > * Handheld Cassette Tape Recorder, $29.95. I use the Voice Memo app almost daily. > * BONUS REPLACEMENT: It’s not an item for sale, but at the bottom of the ad, you’re instructed to ‘check your phone book for the Radio Shack Store nearest you.’ Do you even know how to use a phone book? > You’d have spent $3,054.82 in 1991 to buy all the stuff in this ad that you can now do with your phone. * https://www.huffpost.com/entry/radio-shack-ad_b_4612973 https://www.huffpost.com/entry/radio-shack-ad_b_4612973 That US$1600 Tandy 1600 runs a 286 CPU and has a 20MB hard drive, and supported 640×200×16 resolution (720×350 mode for monochrome monitors): * https://en.wikipedia.org/wiki/Tandy_1000#Tandy_1000_SL_and_TL_series https://en.wikipedia.org/wiki/Tandy_1000#Tandy_1000_SL_and_T... What kind of system can you get for $1600 nowadays?

nradov 5y ago
I always found it funny how most economists claim that deflation would be disastrous because customers would keep delaying purchases while waiting for prices to drop further. And yet everyone keeps buying computers even though we've had almost continuous deflation for decades.
- TeMPOraL 5y ago
  Never connected it with the word "deflation", but I guess I figured out a counterargument as a kid: back then, if you bought a mobile phone contract, you'd find yourself regretting it in less than a month, because the same company now offered a better deal; few months later, a better deal with a better phone. And here you are, locked into a static deal for the next two years. But well, you have to buy that phone eventually, right? So you take the best deal you can find, and stop worrying about it. That's the only sane way. So in general - customers will delay purchases until the reasons they want to make the purchase outweigh the expected savings from delaying further. I've also found the reverse to apply: for example, taking out a mortgage, I opted not to hurry despite fast-rising prices, because I judged the money saved on doing it earlier would not offset the mental cost of adding a house searching and mortgage process on top of two other highly-taxing life events.
- adolph 5y ago
  Until they don't: The Osborne effect is a social phenomenon of customers canceling or deferring orders for the current, soon-to-be-obsolete product as an unexpected drawback of a company's announcing a future product prematurely. The term was coined in reference to the Osborne Computer Corporation, a company that took more than a year to make its next product available, and eventually went bankrupt in 1983. https://en.wikipedia.org/wiki/Osborne_effect https://en.wikipedia.org/wiki/Osborne_effect
  - Dylan16807 5y ago
    That just adds jitter on a month to month basis. Purchases remain nice and steady over time.
  - 5y ago

nradov 5y ago

I always found it funny how most economists claim that deflation would be disastrous because customers would keep delaying purchases while waiting for prices to drop further. And yet everyone keeps buying computers even though we've had almost continuous deflation for decades.

TeMPOraL 5y ago
Never connected it with the word "deflation", but I guess I figured out a counterargument as a kid: back then, if you bought a mobile phone contract, you'd find yourself regretting it in less than a month, because the same company now offered a better deal; few months later, a better deal with a better phone. And here you are, locked into a static deal for the next two years. But well, you have to buy that phone eventually, right? So you take the best deal you can find, and stop worrying about it. That's the only sane way. So in general - customers will delay purchases until the reasons they want to make the purchase outweigh the expected savings from delaying further. I've also found the reverse to apply: for example, taking out a mortgage, I opted not to hurry despite fast-rising prices, because I judged the money saved on doing it earlier would not offset the mental cost of adding a house searching and mortgage process on top of two other highly-taxing life events.
adolph 5y ago
Until they don't: The Osborne effect is a social phenomenon of customers canceling or deferring orders for the current, soon-to-be-obsolete product as an unexpected drawback of a company's announcing a future product prematurely. The term was coined in reference to the Osborne Computer Corporation, a company that took more than a year to make its next product available, and eventually went bankrupt in 1983. https://en.wikipedia.org/wiki/Osborne_effect https://en.wikipedia.org/wiki/Osborne_effect
- Dylan16807 5y ago
  That just adds jitter on a month to month basis. Purchases remain nice and steady over time.
- 5y ago