One of my pet peeves is when people complain about the fact that something only cost $x in, say, 1958 but now costs $y, where “y”, of course, is much, much greater than “x”. They say, “Where have the old days gone?” Or we get these circulating e-mails that list the low, low prices of a slew of items in some bygone decade, inviting us to compare the prices to today’s outrageous prices for the same items.
But they fail to factor in the influence of compounding (and confounding) inflation. That item that cost 50 cents in 1958 would be the equivalent of costing $4 today — so if we paid 50 cents in 1958, we should only complain about rising prices if it costs more than $4 now.
On the other hand, I bought one of the first hand-held (four-function) electronic calculators in 1973 – for a discounted price of $126! That is equivalent to paying $650(!) for this basic calculator functionality today — which I can actually buy for $5. And I can buy a pretty nice full service computer for that $650 today. But the calculator is still working 40 years later – I’m lucky to get 7 years out of my computers. [By the way, this is a 99.2% reduction in equivalent-dollars for this level of basic calculator over these 5+ decades.]
Something a friend keeps bringing up in conversation is how we used to collect just 60 cents a week from customers for delivering daily+Sunday newspapers to their homes — now our Sunday paper alone costs $2.50. Imagine! But it’s all in your perspective, I guess. The 60 cents a week in those days is the equivalent of about $21 a month today. This is actually about the same price as our local newspaper delivery currently costs in my area.
I remember during my high school years “accidentally” seeing what my father’s income was – about $10,000 per year. I thought, “Wow! If I could only earn what he earns, I’d be on easy street.” Never mind that we lived in a small concrete block house and rarely was any money spent on luxuries. But in spite of the outward frugality, I guess he really was doing fairly well, as that income was the same as about $75,000 today. I guess they were saving for retirement.
It’s all relative.
Even though we like to reminisce about the days of cheap gas — for example, at 25 cents a gallon in 1958 — when Obama took office in 2009 the price of gas was still about 25 cents a gallon in terms of 1958 dollars (a little under $2 a gallon in 2009 dollars) – when adjusted for inflation, there really had been no significant increase in the price of a gallon of gas in over 50 years.
I realize that recently things have gotten a bit out of whack, with the effect of a bad economy, a rogue climate, and disgusting politics bringing about soaring prices for food and energy. But in order to keep the conversation about these issues on an even keel, it’s sometimes important to remember that that 4 cent stamp in 1958 has really only gone up by about one-third in inflation-adjusted dollars, even though today’s stamp price has risen to 45 cents.
And that nickel Coke back in 1958? Since Coke was bottled in 6 oz bottles back then, the effect of inflation of the dollar and inflation of the size of the bottle (now commonly 16 oz), a Coke is actually cheaper (by the ounce) today than it was in 1958.
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