> 10k was >250k in todays dollars
Source? A basic inflation calculator tells me that 10k in 1970 is ~70k in 2021.
Yes, that's more, but it's significantly less than 250k.
Source? A basic inflation calculator tells me that 10k in 1970 is ~70k in 2021.
Yes, that's more, but it's significantly less than 250k.
I think they use a basket of goods to calculate inflation, but how has that basket changed / been updated over time? Can any economist weigh in here?
If you want to check out the raw data for the CPI that the US Federal Reserve uses, check out https://fred.stlouisfed.org/ - though I couldn't begin to recommend how to navigate that site.
One is that I think lots of people over-focus on specific sectors: sure houses and college education have gotten more expensive, but clothes, travel and computers have gotten much cheaper. Most of the complaints about "hidden inflation" that I've seen are basically ways of saying 'if you only look at the things that have grown much faster than the inflation average, then it looks like inflation is much greater than average.'
Now the question of 'hedonic adjustments' (how do you account for the problem that no amount of 1970 money could buy you an iPhone, or a car as safe and reliable as any car made in 2021) is a tricky one. As I recall from my macro class <mumble mumble> years ago, economists basically introduce fudge factors to account for that. I recall some speculation that the fudge factors in the health care sector (of the US) were systematically wrong, because the population isn't actually getting healthy or living longer as those numbers would suggest.
I, for one, own a house and am not currently paying for anyone's college education, so the proportion of my budget going to food and clothing is more relevant to me. Should I say that I'm not interested in hearing people tell me how many fewer students I can send to college when I don't have any students to send?
CPI items were picked precisely because they apply to everyone. Raises in housing cost renters more, but increase my net worth as an owner, so it's left out of the CPI. Health care costs in the US are ridiculous, but they're also widely disparate depending on more factors than can be accounted for in a simple measurement like CPI.
Example:
1970 corvette: $5,192.00 (Coupe), $4,849.00 (Convertible) 2021 corvette: $59,900
>>> int(10000 \* (59900 / 5192))
115369
>>> int(10000 \* (5.66 / .65))
87076
Which is still not 250k.
Either way, I see the point you're trying to make, but when people discuss "how much was X in todays dollars" they don't mean "go find a 'basket of goods' to reflect whatever value they want".
CPI is the go-to measure that is understood. Yes, some things are more expensive relative to CPI (housing, education, medical care), but using a non-standard measuring stick is not intellectually honest (unless you make it clear and disclose your reason for why you think it should be different).
This is actually a serious issue with many products, for example cleaning supplies that are sold for the same price but in different bottles with different internal volumes. Even for something as simple as bread, the average loaf on a modern shelf has many chemicals which would not have been present 50 years ago, and if you do go for a loaf comparable to what used to be available you're paying some markup for "organic" or "artisanal" labelling. Indeed virtually no where can you find a good whose price has not been affected by changes to technology, marketing, customer demographics, supply chains, etc. All of these obfuscate the change in the value of money. A reasonable basket-of-goods comparison requires looking at multiple goods and trying to normalize for all these changes.
Also a Big Mac in 2021 is 3.99. A meal is 5.99, which would have been $1.11 in 1970. Although even here, McDonalds is a very different restaurant now, it's impossible to say how much is inflation and how much is the big mac no longer being one of 6 items on the menu.
This person is clearly neither a car enthusiast not a Corvette collector (e.g. one who determines the price via purchasing)
And it doesn't matter if a car enthusiast doesn't care about safety features, if the manufacturer is required to put them in, and they cost money to add, then they affect the price all the same.
Also I used to drive a corvette. It's actually a remarkably practical car for its category - not insanely expensive, low maintenance costs, and good lifetime. It's hardly a super-car intended for a small niche audience (though admittedly not a workhorse).