How can prices be compared over time?

How can prices be compared over time?

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I've just asked a question where Tyler Durden wrote in his answer that paper was expensive at Euclids time.

So I wanted to ask the question:

How did the price of paper / papyrus develop over time?

But then I realized that it might be impossible to answer it with a simple time-price chart, even if one had all information.

So the question is: How do historians evaluate if something is "expensive"? How are prices of goods compared over the regions / times? Do already build "comparison tables" exist?

What I thought of

First try: Comparision with other goods

There are certainly goods that still exist in comparable quality (I could think of gold, sheep, cows, stone or ground), the ratio might be different. So simply calculating

  • n = number of grams of gold one had to pay for 100 papyrus scrolls
  • w = price of gold in Euro / gram
  • price of papyrus in todays values = n*w

is too simple. But eventually one could give multiple prices like that to give a meaningful impressing?

Second try: Work force

As soon as we have coins, we can probably compare what people have for a living (per month). One could sort those incomes and trim the top/bottom 25% to get an average income. Then one could calculate

  • s = income of the region we want something to be compared with the method described above in [old currency / month]
  • x = value of the good from region / time of s in [old currency]
  • t = todays average income (calculated the same way) in [new currency/month]
  • price of papyrus in todays values = (x/s)*t

Economic history's great attempt to produce a great price/wage series for Southern England's monasteries, agricultural labourers, and modern workers failed. It leaves us with the series used by Measuring Worth, but the series is untrustworthy:

1) Wage labour was not generalised until the 19th century, this makes "wages" and "prices" meaningless.

2) Series construction raises great problems

3) The reliance upon southern English monestaries' as a record source means a poor generalisation even to people in receipt of wages of account; and cannot really be generalised out to the surrounding local markets.

So there's no way to reconstruct a wage price series beyond 1700 with any confidence.

There are certainly goods that still exist in comparable quality (I could think of gold, sheep, cows, stone or ground), the ratio might be different.

No, these weren't "goods" in the past, their social meaning was entirely different. We can try to evaluate their social importance by understanding the past economic and social system as it was, but a comparison can only be made in terms to evaluating and comparing concrete past societies. We can't run a sheep/cow index any better than wage/price.

As soon as we have coins, we can probably compare what people have for a living (per month).

Wages were not socially determinate before 1790, and then only in England. Wage labour, and the "wage" as we understand it as the only basis of subsistence, is a very very new thing.

Finally, what are we comparing? Paper for personal consumption? Paper as a production object in the mode of production? Paper as a dedication of social resources? These are all very different time meanings of social worth.

I relate to economic history as a modern social historian, but reading Measuring Worth's discussion of the problems with post 1950 wage/price series ought to be illustrative, as should the history of the Australian C series index which is available on Australian Bureau of Statistics' website for the Australian CPI index.

To declare I don't have a definite answer, but with my answer I might get you somewhat closer to the ultimate method.

To estimate a value back in time is especially hard because of the following factors:

  • There were various monetary systems (not just currencies) over time. For example the silver/gold backed 1 Krone in Austro-Hungarian empire worth 0,3 grams of gold back in 1892 which is today roughly 9,5 EUR. But since then the Krone collapsed, in Hungary the Pengő collapsed, in Austria the Schilling inflated then switched to EUR. You can use any inflation calculator which will be more or less accurate, but I am sure they don't work back into middle ages.

  • Gold and silver were used for money for more time than they weren't. You can measure things in gold and silver, these two commodities were money for very long time, and they were rare. The measurement won't be precise since as other people wrote too: the historical exchange from gold to silver was usually close to 1:15 to 1:16. Mike Maloney conducted fine research on gold and silver, you can watch his videos on youtube and read his books. That surely helps understanding the mechanics of gold/silver based monetary system and its relationship to the modern monetary system. Be careful with the comparasion, in 1900 there were less than 2 billion of people, and not mentionable use of industrial gold, today, the extraction is higher, but more costy, we now have industrial use of gold and soon we will have 8 billion people.

  • As you said: you can measure things in labour. The only common ground value is the uneducated AND two handed hard labour's value, since in that case you don't have to count with the expertise extra fee of education, cost of machines etc… Take note that in 19th century people worked harder in sweatshops in Europe than today's Europe, so you might need to compare first the economic value of a normal 8 hours workday with a 12 hours workday on the field, which didn't happen in winter since they had no work with the frozen ground.
    The productivity increased by the new scientific discoveries, more advanced machinery etc…

  • property, land etc… these are also problematic to compare since the population increased a lot, but the available territory was pretty much the same.

If we take these measurements to account, you can get a certain precision comparasion, but never very accurate.
If I would need to make an estimate, I would take some sort of an average of the following:

  1. Gold value back in time compared to 1900's USD (backed by Gold) and then use inflation adjustment.
  2. Labour value between the two eras, first I would need to find out for example how many hours a roman peasant worked on the field in an average year and use it as base in comparasion to modern days work.
  3. property, land, etc…
  4. other methods (?)

I would say, this kind of comparasion requires tons of time to research for each eras.

If I have to take a method, I would choose a cost efficient version. It would be the first method since history of Gold usage for money. Take the comparasion between a fixed Gold standard USD from the very beginning of the 20th century (let's say 1900) and then compare that USD to modern USD inflation adjusted. For silver, be careful, since the gold-silver ratio was fixed for long time, but was released in the middle of the 19th century.

And an additional chart for Gold price history

Understanding historical prices is a difficult problem, and even historians of economics use methods that I would consider inadequate. Many published estimates of ancient prices and value are often wildly wrong. Regular historians (not economists) are even worse at value estimation and rarely suggest modern equivalents with any meaningful accuracy.

There is actually a very simple way to relate ancient values to modern values and that is through the medium of gold. It is an approximate measure, obviously, but much better than the typical methods you will find economists using.

For example, in Pompeii which was covered in ash in 79 A.D. a loaf of bread was listed at 2 asses (an as is a copper piece). If you work out the gold equivalent (the aureus), it comes to about $1 today, which interestingly enough is about what a loaf of bread costs today (on sale). In the Koran it lists the price of a sheep in gold dirhams which comes out to $400 which is about what it costs for a sheep today.

In general, everything is cheaper today than it was in the past due to mechanization, and the effects are not equal. For example, in the old days silver was about 1/20th the price of gold, but nowadays due to the Comstock lode and other factors (such as the silver recovered from copper mining), silver is only about 1/60th the value of gold.

You can also relate money via work or wages. In other words, you can say: making a Roman tunic took an ancient tailor 3 hours. If we convert this to a modern skilled worker wage of $20 per hour, the tunic is "worth" $60. So, value is determined and synchronized as a unit of a worker's time. Of course you have to remember that different civilizations have different wage scales. For example, workers in ancient Rome would make a lot more than the same worker out in the boonies in Britain, just like today a worker in Manhatten will make more than some guy in Nigeria.

Such estimates have actually been made.

Roger Bagnall in a recent book writes that the price of a sheet of papyrus was "something like a quarter to a third of the value of the food for an active adult for a day". Or, to put it more succintly "a sheet of paper cost you as much as a hamburger". (p. 134).

A similar estimate (probably derived from the same sources) is quoted by QuintusCinna Cocceius from a book by Harris here:

Papyrus was extensively used by the elite, and all well-to-do Romans were familiar with it. But in spite of some assertions to the contrary it must have been quite expensive for most people's purses, currently outside Egypt, which remained the main source of supply. The price at Tebtunis in the period 45-49 seems normally to have been four drachmas a roll, and a single sheet might cost two obols- this at a time when skilled labor earned about six obols a day, unskilled three. The price is analogous to one of, say, thirty to thirty five dollars for a sheet of paper today. The real price of papyrus would have been much higher in Greece or Italy, not to mention Spain or Britain, than in Egypt.

Also, in another book by Bagnall the sixth-century cost of a single gospel book is estimated to be a third of a solidus which he renders as about 1,000 dollars in today's money. (See here)

Measuring economic worth over time

The measurement of economic worth over time is the problem of relating past prices, costs, values and proportions of social production to current ones. For a number of reasons, relating any past indicator to a current indicator of worth is theoretically and practically difficult for economists, historians, and political economists. This has led to some questioning of the idea of time series of worth having any meaning. However, the popular demand for measurements of social worth over time have caused the production of a number of series.

Are Annual Returns a Good Measure?

The years that stocks outperformed bonds are in blue, and the years that bonds outperformed stocks are in orange. The chart is an ocean of blue. It would seem that investing in stocks is an easy choice—why would anyone invest in bonds? As it turns out, performance is only one measure for successful investing.

How you invest has a lot to do with how much time you have before you need the money. If you are in the early to middle part of your career and invest for retirement, your time horizon is probably more than 10 years. On the other hand, if you are an active trader, you are looking for profits in a matter of days or weeks.

The following chart shows rolling 10-year returns from 1938-2019 for the performance of stocks compared to bonds. Rolling 10-year returns for each year represents the annualized return for the previous 10 years. For example, 1950 represents the 10-year annualized return from 1940 to 1950.

Notice the difference: Looking at 10-year results, they are "smoother" than annual results, and bonds look more attractive. Also, notice that the only negative years for stocks during any of the 80 rolling 10-year periods are 1938 through 1940, which reflect the lingering impact of the Great Depression. There are 19 individual negative years for stocks in the same period, by comparison.

This also illustrates how balancing your stockholdings with some stability from bond ownership in a portfolio can provide a hedge for potentially volatile swings in stock prices.

This was the year when Apple began launching two variants of iPhones at the same time. While iPhone 5c was essentially a rebranding of the iPhone 5 but with new colors, the iPhone 5s introduced the Touch ID and had a slightly revamped look.

The price of iPhone 5c started at $99 for the 16GB variant and the iPhone 5s cost around $199 for the 16GB variant. These came to India and had a starting price of Rs 41,900 for the 16GB iPhone 5c and Rs 53,500 for the 16GB iPhone 5s.

How can prices be compared over time? - History

Seven Ways to Compute the Relative Value of a U.S. Dollar Amount - 1790 to Present

Determining the relative value of an amount of money in one year (the initial year) compared to another (the desired year) is more complicated than it seems at first. There is no single "correct" measure, and economic historians use one or more different index depending on the context of the question.

An index such as the Consumer Price Index is measured as the price of a "bundle" of goods and services that a representative group buys or earns. Over time the bundle changes for example, carriages are replaced with automobiles, and new goods and services are invented such as cellular phones and heart transplants.

These considerations do not stop the fascination with these comparisons or even the necessity for them. For example, such comparisons may be critical to determine appropriate levels of compensation in a legal case that has been deferred. The context of the question, however, may lead to a preferable measure other than the real price (real wage, or real cost) as measured by the Consumer Price Index (CPI), which is used far too often without thought to its consequences.

Therefore, when talking about the (relative) worth of an item, it should be categorized as a commodity, a project, or an observation of compensation or wealth. Then (and only then) should it be measured relative to well-defined indexes of economic activity that put the item in perspective. This process will generate specific definitions of relative worth that depend on the index used and the type of item it is.

For more discussion on how to pick the best definition to use, check out Choosing the Best Measure of Relative Worth, the Tutorials, or consult the essay Measures of Worth.

The Seven Indexes Used

Definitions of Relative Worth

The definitions of relative worth presented here are computed using the ratio of the change in the indexes listed above. Your initial amount is multiplied by the observed value of each index from the desired year divided by the observed value from the initial year. The best measure of the relative worth over time depends on the type of thing you wish to compare. (click on each to get its definition.)

If you are looking at a Commodity, then the best measures are:

Real Price is measured as the relative cost of a (fixed over time) bundle of goods and services such as food, shelter, clothing, etc., that an average household would buy. In theory the size of this bundle does not change over time, but in practice adjustments are made to its composition. This measure uses the CPI.

Relative Value in Consumption is measured as the relative cost of the amount of goods and services such as food, shelter, clothing, etc., that an average household would buy. Historically this bundle has become larger as households have bought more over time. This measure uses the Value of the Consumer Bundle, which is only available after 1900.

Labor Value is measured as the multiple of the average wage that a worker would need to use to buy the commodity. This measure uses one of the wage indexes.

Income Value is measured as the multiple of average income that would be needed to buy a commodity. This measure uses the index of GDP per capita.

Economic Share is the worth of a commodity in a particular time period divided by GDP it is its share of total output. This is helpful in measuring the relative value of aggregate consumption items such as all the cars made in a year.

If you are looking at an Income or Wealth, then the best measures are:

Real Wage or Real Wealth measures the purchasing power of an income or wealth by its relative ability to buy a (fixed over time) bundle of goods and services such as food, shelter, clothing, etc. This bundle does (in theory) not change over time. This measure uses the CPI.

Household Purchasing Power is measured as the relative cost of a bundle of goods and services such as food, shelter, clothing, etc., that an average household would buy. This bundle has become larger as households have bought more over time. This measure uses the Value of the Consumer Bundle, which is only available after 1900.

Relative Labor Earnings measures an amount of income or wealth relative to the wage of the average worker. This measure uses one of the wage indexes.

Relative Income measures an amount of income or wealth relative to per capita GDP. When compared to other incomes or wealth, it shows the economic status or relative "prestige value" the owners of this income or wealth because of their rank in the income distribution. This measure uses GDP per capita.

Relative Output The ratio of income, compensation or wealth to GDP provides a sense of the share of the economy it represents, the amount of what we call the relative output it commands. Many believe that the rich have access to political favors that are denied to the average person. In that sense, their income and wealth relative to the output of the economy is a measure of their economic power.

If you are looking at a Project, then the best measures are:

Real Cost of a project is measured by comparing its cost to the cost index of all output in the economy. This measure uses the GDP Deflator.

Household Cost is the cost of a project relative to the amount the average household spends annually on consumer goods and services. The project may pertain either to business/government, a person/household, or to a nonprofit institution. This measure uses the Value of the Consumer Bundle, which is only available after 1900.

Labor Cost of a project is measured as a multiple of the average wage of the workers that might be used to build the project. This measure uses one of the wage indexes.

Economy Cost of a project is measured as the cost of the project as a percent of the output of the economy. This measure indicates the opportunity cost in terms of the total output of the economy. It can be interpreted as the importance of the item to society as a whole. This measure uses the share of GDP.

Here Are Some Examples

George Washington was paid a salary of $25,000 a year from 1789 to 1797 as the first president of the United States. The current salary of the president is now $400,000, to go with a $119,000 expense account, a generous pension and several other benefits. Has the remuneration improved?

Making a comparison using the CPI for 1790 shows that $25,000 corresponds to about $720,000 today, so current presidents do not have an equal command over consumer goods as the Father of the Country. (0f course, Washington had to travel by horse drawn carriage, not helicopters or Air Force One.)

When comparing Washington's salary to an unskilled worker, or the measure of average income, GDP per capita, then the comparable numbers are $15 to $37 million. Granted that would not put him in the ranks of the top 25 executives today that make over $200 million. It would, however, be many times more than any elected official in this country is paid today. Finally, to show the "economic power" of his wage, we see that his salary as a share of GDP would rank him equivalent to $2.8 billion.

The Erie Canal was built between 1817 and 1825 for a price of $7 million. This waterway is regarded as one of the most important investments in the nineteenth century as it opened the Midwest to trade and migration. How does its cost compare to what its cost would be today?

Using the GDP deflator for 1825 shows that it would be $187 million, not more than the cost today of a few miles of Interstate highway. Using the unskilled wage measure the cost is $2.3 billion. From a historical point of view, this may be the best measure as most of the cost of building the canal was probably unskilled labor. Using the manufacturing workers index gives us a much higher cost of $4.7 billion.
Using the GDP per capita, the cost is close to $6.2 billion, and as a share of GDP, it comes in close to $182 billion. As a comparison the current budget of the U.S. Department of transportation is $70 billion.

Because of the volatility of prices in that period, if we had chosen 1817 instead of 1825, the GDP deflator computations would have been about 22% less and the other measures are different by similar magnitudes as well. This is a good example of how "approximate" these comparisons are.

Slavery in the United States was an institution that had a large impact on the economic, political and social fabric of the country. The average price of a slave in 1860 was $800 and the economic magnitude of that price in today's values ranges from $19,000 to $336,000, depending on the index used.

In that year, there were an estimated four million slaves living in the South and it is estimated that their aggregate market value was over $3 billion then. That corresponds to $10 trillion today (as a share of GDP).

For a discussion of these issues, see Measuring Slavery in 2016 Dollars.

  • The Civil War was one of the most devastating events in the history of the United States. It lasted from 1861 to 1865 and has been estimated to have a direct cost of about $6.7 billion valued in 1860 dollars. If this number were evaluated in dollars of today using the GDP deflator it would be $160 billion, less than one-fourth of the current Department of Defense budget. This would be inappropriate, as would be using the wage or income indexes. The only measure that makes sense for an expenditure of this size is to use the share of GDP, as the war impacted the output of the entire country. Thus the relative value of $6.7 billion of 1860 would be $32.7 trillion today, or over 150% of our current GDP.

The $6.7 billion does not take into account that the war disrupted the economy and had an impact of lower production into the future. Some economic historians have estimated this additional, or indirect cost, to be another $7.3 billion measured in 1860 dollars. This means the cost of the war (as a share of the output of the economy) was nearly $68 trillion as measured in current dollars.

The Model T Ford cost $850 in 1908 however, by 1925 the price had fallen to $290. How do we compare these values? If you wanted to compare the two years you would see that by using the CPI, the GDP deflator or the consumer bundle, $850 in 1908 is equivalent to a value between $1,485 and $1,670 in 1925. Using the wage index we see that the labor cost (of the 1908 car in 1925 wages) was $2,094 and by using the GDP per capita index it was $1,957. Thus in 1925 the $290 was less than 20% of its cost in 1908 using the price indexes and only 11 to 14% using the wage indexes and 15% using the GDP per capita.

If we wanted to consider the costs of the Model T using today's prices we would find that the $850 cost in 1908 is $23,400 in today's prices using the CPI, $16,700 using the GDP deflator, about $44,700 using the consumer bundle, $101,800 using the unskilled wage, $168,900 using the manufacturing compensation, and $147,400 when comparing using the GDP per capita. At this point the Ford was a luxury for most everyone.

The $290 in 1925, on the other hand, would be only $4,100 in today's prices using the CPI, $3,300 using the GDP deflator, $7,500 using the consumer bundle, $14,100 using the unskilled wage, $18,700 using the manufacturing compensation, and $21,800 when comparing using the GDP per capita. By then, the ford was an automobile affordable by all.

Babe Ruth signed a contract on March 10, 1930 with the American League Base Ball Club of New York (The Yankees) to play baseball for the next two years at an annual salary of $80,000. In 2019, the CPI was 16 times larger than it was in 1931, and the GDP deflator was 13 times larger. This means that if we are interested in Ruth's purchasing power of housing or meals, then he was "earning" the equivalence of about $1,290,000 today.

In 2019, the average consumer unit spends about 32 times in dollars more than it spent 82 years earlier. Thus, if we want to compare Ruth's earnings using the index of what the average household buys, it would be over $2,530,000 today. The relative cost of labor is 48 times (unskilled) and 63 times (manufacturing production workers) higher in 2019 than in 1931. So if we wanted to compare his wage to what someone selling hot dogs would earn, we could say his "relative wage" is four to five million.

GDP per capita and GDP are 95 and 250 times larger in 2019 than they were in 1931. Thus, Ruth's earnings relative to the average output would be $7,600,000 today. Finally, as a share of GDP, Ruth's "output" that year would be $20,000,000 in today's money.

Putting a man on the moon: in March of 1966) NASA told Congress the "run-out cost" of the Apollo program (to put men on the moon) would be an estimated $22.718 billion for the 13 year program that accomplished six successful missions of putting astronauts on the moon between July 1969 and December 1972. ( According to Steve Garber, NASA History Web Curator, the final cost was between $20 and $25 billion.

How much would that be today? If we used the CPI, it would be $171 billion, but this would not be a very good measure since the CPI does not reflect the cost of rockets and launch pads. Using the consumer bundle would not be relevant either. Using the broader based GDP deflator gives a present cost of $134 billion. An alternative would be to use the production worker index as a rough measure of the labor cost in current terms and that would be $234 billion. By using the GDP per capita, we are measuring the cost in terms of average product and would get a number of $326 billion. Finally, a way to consider the "opportunity cost" to society, the best measure might be the cost as a percent of GDP, and that number would be $540 billion. This amount over thirteen years would be $40 billion per year. As a comparison, the NASA budget for the current fiscal year is approximately $19 billion.

The "real" price of gasoline: Gasoline cost 22 cents a gallon in 1929 compared to around $2.75 today.* How has the relative cost of buying gas changed over the last 90 years? Presented here are two tables computing the annual "real" cost using our seven indexes, one in 2019 dollars, and the other in 1929 dollars. While the two tables show the same trends, they do give a different perspective.

Using the 2019 table and the CPI and the GDP deflator, we see that gasoline was quite expensive in 2012 and it was the cheapest in 1998. In 2019, the real price using these two measures is 30% to 50% higher than the decade of the 1990s. (Note, the 2020 price may be the lowest we have ever seen.)

By looking at the share of the Consumer Bundle and GDP per capita, the story is a bit different. In 1931, the “real” price of Gasoline was $2.85 using the CPI, however, a gallon of gas took as much out of what the average consumer spent as $6.86 did in 2019. And as a share of GDP per capita, gas was even more expensive in those earlier days as it was over $17.89 in 1931 and as much as $6.74 in 1960.

The other table tells the story in a different way. Let us look at relative cost to a worker to fill up using 1929 dollars. That year the 21 cents it cost for a gallon of gas, took a certain share of the worker's wage. The interesting question is, has the cost as a share or percent of the worker's wage increased or decreased over time? The table shows that for the two wage rates and price of gasoline in other years, this cost has fallen. Since wages have increased faster than the price of gasoline, by 2019 an unskilled worker spends less than one-fifth as much, as a percent of wages, for a gallon of gasoline than the 1929 worker. For a production worker it is a little more than a quarter. The table shows that the $2.64 a worker paid in 2019 would be comparable to only 3 to 5 cents (in 1929 prices "share" of the wage.)

When we use the GDP per capita, the cost has fallen faster. Looking at the table shows that a gallon of gasoline today costs around 3 cents a gallon (in 1929 prices) if measured as a "share" of the GDP per capita. This is because in 1929, 21 cents was 0.44% of per capita GDP, while in 2019, $2.45 was 0.004%.

Finally, comparing its cost as a share of GDP, we see that for 2019 (in 1929 prices), it is about 1 cent. This means that a gallon of gasoline was over 21 times larger as a share of output in 1929 than it is today.

Price is for Regular Leaded Gasoline until 1990 and for Regular Unleaded Gasoline thereafter.
Source: For 1929 to 2011: Fact #741: August 20, 2012 Historical Gasoline Prices, 1929-2011.
For 2012 to present, Table 5.4, various Annual Energy Review, Energy Information Administration.


Samuel H. Williamson, "Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1790 to present," MeasuringWorth,

Please let us know if and how this discussion has assisted you in using our comparators.

Inflation is measured against a basket of goods. It's a symptom of what's going on in markets. Some products go up in price over time. Some go down in time. Some stay the same price, but change their specification.

So it's looking down the wrong end of the microscope, to ask why inflation hasn't affected car prices. Car prices are part of inflation. Changes in car prices affect inflation.

The causal link the other way is very very weak. Inflation puts pressure on wages. If this causes wages to rise, then the cost curve shifts, and equilibrium prices change. But for cars, wage costs are a very small part of total car manufacturing cost. And the market for labourers in the industry has shrinking demand and over-supply, so upward pressures are very weak.

The inflation experienced by car manufacturers is very different to the inflation experienced by the public. We've been through a global financial crisis and a super-cycle in commodities. A general-public inflation measure is a very poor measure of input-cost inflation for car manufacturers.

You also didn't look at car prices in general but rather just the Toyota Camry. For example a 2001 BMW M3 was

$46,000 while a 2018 BMW M3 is

Most cars have increased in price over the last 20 years, but some manufacturers will always have a cheap car in their lineup .

Specifically treating car prices, well, the prices are determined globally and not necessarily in dollars

In the last 20 years:

Car manufacturers move factories across borders to save costs, China and India have become major market player both as major manufacturers and as a major consumers

As a result of these causes, an additional major impact was added, which is the exchange currencies' exchange rates.

For the last 10 years:

Following the global economic crisis, interest rates dropped to practically zero worldwide, trying, among other things, to encourage local exports, in what was called a "currency war".

The last major impact, that I can add, might sound trivial, but it's there: the technology improvements implemented in car factories over the past 20 years, must have dropped the cost of manufacturing, for the same vehicles. meaning: either vehicles cost remained similar but cars got better, so products are not that comparable.

Vehicle manufacturing in the same place, over time got cheaper.

You're not considering that today's $23,000 car might not be the same car as the one from 20 years ago, or that the costs of its manufacture might not be the same.

While the "basket of goods" another answerer referred to has simple items in it like rice, soap, tee-shirts and hammers, a car is a very poor item to measure inflation with, because of its complexity. Hundreds of parts and indeed hundreds of different types of materials go into it. Many dozens of different raw commodities are involved. Scores of different kinds of worker inputs are involved, with probably thousands of different individual contributors adding value along the way before you get your car.

Today's $23,000 car is probably made with cheaper materials. A 20-year-old Camry today probably feels cheap-o compared to a brand-new one, but, at the time, a brand-new Camry at that price point 20 years ago probably felt reasonably decent compared to other Camrys at lower trim levels and other cars at lower price points. Today's $23K Camry on the other hand feels cheap-o compared to the premium trim Camry and compared to other cars at higher price points with more premium materials.

That's one factor. Another is, today's cars are produced with 20 years' worth of production efficiency improvements. So even with the 20 years worth of technology improvements which make today's Camry a more advanced car than the 20-year-old one, it's still cheaper because cheaper ways to automate production have been found.

Products like this are really really bad things to use to judge inflation. Today's iphones cost about the same as those from 10 years ago too (in nominal dollars), but they're clearly way way more phone for your money. Something today with five million times the computing power of something which took a Congressional appropriation 60 years ago costs a five-millionth as much as that dinosaurian system.

Certain things work against the inflationary trend, on the surface, but really tell you nothing whatsoever about inflation.

How can prices be compared over time? - History

For most of the past twenty years, the challenges confronting monetary policymakers centered on addressing the question of how inflation could be brought down with as little economic disruption as possible. Given the progress that has been made in reducing inflation, and the very solid economic performance that this low-inflation environment has helped to promote, a new set of issues is now emerging on the policy agenda. Of mounting importance is a deeper understanding of the economic characteristics of sustained price stability. We central bankers need also to better judge how to assess our performance in achieving and maintaining that objective in light of the uncertainties surrounding the accuracy of our measured price indexes.

In today's advanced economies, allocative decisions are primarily made by markets. Prices of goods and services set in those markets are central guides to the efficient allocation of resources in a market economy, along with interest rates and equity values. Prices are the signals through which tastes and technology affect the decisions of consumers and producers, directing resources toward their highest valued use. Of course, this signaling process, which involves individual prices, would work with or without government statistical agencies that measure aggregate price levels, and in this sense, price measurement probably is not fundamental for the overall efficiency of the market economy. Indeed, vibrant market economies existed long before government agencies were established to measure prices.

Nonetheless, in a modern monetary economy, accurate measurement of aggregate price levels is of considerable importance, increasingly so for central banks whose mandate is to maintain financial stability. Accurate price measures are necessary for understanding economic developments, not only involving inflation, but also involving real output and productivity. If the general price level is estimated to be rising more rapidly than is in fact the case, then we are simultaneously understating growth in real GDP and productivity, and real incomes and living standards are rising faster than our published data suggest.

Under these circumstances, policymakers must be cognizant of the shortcomings of our published price indexes to avoid actions based on inaccurate premises that will provoke undesired consequences. Clearly, central bankers need to be conscious of the problems of price measurement as we gauge policies designed to promote price stability and maximum sustainable economic growth. Moreover, many economic transactions, both private and public, are explicitly tied to movements in some published price index, most commonly a consumer price index and some transactions that are not explicitly tied to a published price index may, nevertheless, take such an index into account less formally. If the price index is not accurately measuring what the participants in such transactions believe it is measuring, then economic transactions will lead to suboptimal outcomes.

The remarkable progress that has been made by virtually all of the major industrial countries in achieving low rates of inflation in recent years has brought the issue of price measurement into especially sharp focus. For most purposes, biases of a few tenths in annual inflation rates do not matter when inflation is high. They do matter when, as now, inflation has become so low that policymakers need to consider at what point effective price stability has been reached. Indeed, some observers have begun to question whether deflation is now a possibility, and to assess the potential difficulties such a development might pose for the economy.

Even if deflation is not considered a significant near-term risk for the economy, the increasing discussion of it could be clearer in defining the circumstance. Regrettably, the term deflation is being used to describe several different states that are not necessarily depicting similar economic conditions. One use of the term refers to an ongoing fall in the prices of existing assets. Asset prices are inherently volatile, in part because expected returns from real assets can vary for a wide variety of reasons, some of which may be only tangentially related to the state of the economy and monetary policy. Nonetheless, a drop in the prices of existing assets can feed back onto real economic activity, not only by changing incentives to consume and invest, but also by impairing the health of financial intermediaries--as we experienced in the early 1990s and many Asian countries are learning now. But historically, it has been very rapid asset price declines--in equity and real estate, especially--that have held the potential to be a virulently negative force in the economy. I emphasize rapid declines because, in most circumstances, slowly deflating asset prices probably can be absorbed without the marked economic disruptions that frequently accompany sharp corrections. The severe economic contraction of the early 1930s, and the associated persistent declines in product prices, could probably not have occurred apart from the steep asset price deflation that started in 1929.

While asset price deflation can occur for a number of reasons, a persistent deflation in the prices of currently produced goods and services--just like a persistent increase in these prices--necessarily is, at its root, a monetary phenomenon. Just as changes in monetary conditions that involve a flight from money to goods cause inflation, the onset of deflation involves a flight from goods to money. Both rapid or variable inflation and deflation can lead to a state of fear and uncertainty that is associated with significant increases in risk premiums and corresponding shortfalls in economic activity.

Even a moderate rate of inflation can hamper economic performance, as I have emphasized many times before and although we do not have any recent experience, moderate rates of deflation would most probably lead to similar problems. Deflation, like inflation, would distort resource allocation and interfere with the economy's ability to reach its full potential. It would have these effects by making long-term planning difficult, obscuring the true movements of relative prices, and interacting adversely with institutions like the tax system that function on the basis on nominal values.

But deflation can be detrimental for reasons that go beyond those that are also associated with inflation. Nominal interest rates are bounded at zero, hence deflation raises the possibility of potentially significant increases in real interest rates. Some also argue that resistance to nominal wage cuts will impart an upward bias to real wages as price stability approaches or outright deflation occurs, leaving the economy with a potentially higher level of unemployment in equilibrium.

A deflation that took place in an environment of rapid productivity growth, however, might be largely immune from some of these special problems. For example, in the high-tech sector of our economy today, we observe falling prices together with rapid investment and high profitability. Although real interest rates may be quite high in terms of this sector's declining product prices, rapid productivity growth has ensured that real rates of return are higher still, and investment in this sector has been robust. In practice, firms' decisions depend on an evaluation of their nominal return on investment relative to their nominal cost of capital. In this sense, the choice of a specific, sometimes arbitrary, definition of real output and hence of price by government statisticians is essentially a descriptive issue, and not one that directly affects firms' investment decisions. This is an illustration of where even individual price measurement probably is not always of direct and fundamental importance for private sector behavior.

If such high-tech, high-productivity-growth firms produce an increasing share of output in the decades ahead, then, one could readily imagine the economy experiencing an overall product price deflation in which the problems associated with a zero constraint on nominal interest rates or nominal wage changes would seldom be binding. Nevertheless, even if we could ensure significantly more rapid productivity growth than we have seen recently, there are valid reasons for wishing to avoid ongoing declines in the general price level. If increases in both inflation and deflation raise risk premiums and retard growth, it follows that risk premiums are lowest at price stability. Furthermore, price stability, by reducing variation in uncertainty about the future, should also reduce variations in asset values.

But how are we to know when our objective of price stability has been achieved? In price measurement, a distinction must be made between the measurement of individual prices, on the one hand, and the aggregation of those prices into indexes of the overall price level on the other. The notion of what we mean by a general price level--or more relevantly, its change--is never unambiguously defined.

Issues of appropriate weighting in the aggregation process will presumably always bedevil us. But it is the measurement of individual prices, not their aggregation, that pose the most difficult conceptual issues. At first glance, observing and measuring prices might not appear especially daunting. But, in fact, the problem is deceptively complex. To be sure, the dollar value of most transactions is unambiguously exact, and, at least in principle, is amenable to highly accurate estimation by our statistical agencies. But dividing that nominal value change into components representing changes in real quantity versus price requires that one define a unit of output that is to remain constant in all transactions over time. Defining such a constant-quality unit of output, of course, is the central conceptual difficulty in price measurement.

Such a definition may be clear for unalloyed aluminum ingot of 99.7 percent or greater purity in wide use. Consequently, its price can be compared over time with a degree of precision adequate for virtually all producers and consumers of aluminum ingot. Similarly, the prices of a ton of cold rolled steel sheet, or of a linear yard of cotton broad woven fabric, can be reasonably compared over a period of years.

But when the characteristics of products and services are changing rapidly, defining the unit of output, and thereby adjusting an item's price for improvements in quality, can be exceptionally difficult. These problems are becoming pervasive in modern economies as high tech and service prices, which are generally more difficult to measure, become ever more prominent in aggregate price measures. One does not have to look only to the most advanced technology to recognize the difficulties that are faced. To take just a few examples, automobile tires, refrigerators, winter jackets, and tennis rackets have all changed in ways that make them surprisingly hard to compare to their counterparts of twenty or thirty years ago.

The continual introduction of new goods and services onto the markets creates special challenges for price measurement. In some cases, a new good may best be viewed as an improved version of an old good. But, in many cases, new products may deliver services that simply were not available before. When personal computers were first introduced, the benefits they brought households in terms of word processing services, financial calculations, organizational assistance, and the like, were truly unique. And, further in the past, think of the revolutionary changes that automobile ownership, or jet travel, brought to people's lives. In theory, economists understand how to value such innovations in practice, it is an enormous challenge to construct such an estimate with any precision.

The area of medical care, where technology is changing in ways that make techniques of only a decade ago seem archaic, provides some particularly striking illustrations of the difficulties involved in measuring quality-adjusted prices. Cures and preventive treatments have become available for previously untreatable diseases. Medical advances have led to new treatments that are more effective and that have increased the speed and comfort of recovery. In an area with such rapid technological change, what is the appropriate unit of output? Is it a procedure, a treatment, or a cure? How does one value the benefit to the patient when a condition that once required a complicated operation and a lengthy stay in the hospital now can be easily treated on an outpatient basis?

Although we may not be able to discern its details, the pace of change and the shift toward output that is difficult to measure are more likely to quicken than to slow down. How, then, will we measure inflation in the future if our measurement techniques become increasingly obsolete? We must keep in mind that, difficult as the problem seems, consistently measured prices do exist in principle. Embodied in all products is some unit of output, and hence of price, that is recognizable to those who buy and sell the product if not to the outside observer. A company that pays a sum of money for computer software knows what it is buying, and at least has an idea about its value relative to software it has purchased in the past, and relative to other possible uses for that sum of money in the present.

Furthermore, so long as people continue to exchange nominal interest rate debt instruments and contract for future payments in terms of dollars or other currencies, there must be a presumption about the future purchasing power of money no matter how complex individual products become. Market participants do have a sense of the aggregate price level and how they expect it to change over time, and these views must be embedded in the value of financial assets.

The emergence of inflation-indexed bonds, while providing us with useful information, does not solve the problem of ascertaining an economically meaningful measure of the general price level. By necessity, the total return on indexed bonds must be tied to forecasts of specific published price indexes, which may or may not reflect the market's judgment of the future purchasing power of money. To the extent they do not, of course, the implicit real interest rate is biased in the opposite direction. Moreover, we are, as yet, unable to separate compensation for inflation risk from compensation for expected inflation.

Eventually, financial markets may develop the instruments and associated analytical techniques for unearthing these implicit changes in the general price level with some precision. In those circumstances, then--at least for purposes of monetary policy--these measures could obviate the more traditional approaches to aggregate price measurement now employed. They may help us understand, for example, whether markets perceive the true change in aggregate prices to reflect fixed or variable weight indexes of the components, or whether arithmetic or logarithmic weighting of the components is more appropriate.

But, for the foreseeable future, we shall have to rely on our statistical agencies to produce the price data necessary to assess economic performance and to make economic policy. In that regard, assuming further advances in economic science and provided that our statistical agencies receive adequate resources, procedures should continue to improve. To be sure, progress will not be easy, for estimating the value of quality improvements is a painstaking process. It must be done methodically, item by item. But progress can be made.

In recent years, we have developed an improved ability to capture quality differences by pricing the underlying characteristics of complex products. With an increasingly wide range of product variants available to the public, product characteristics are now bundled together in an enormous variety of combinations. A "personal computer" is, in actuality, an amalgamation of computing speed, memory, networking capability, graphics capability, and so on. Computer manufacturers are moving toward build-to-order systems, in which any combination of these specifications and peripheral equipment is available to each individual buyer. Other examples abound. Advancements in computer-assisted design have reduced the costs of producing multiple varieties of small machine tools. And in services, witness the plethora of products now available from financial institutions, which have allowed a more complete disentangling and exchange of economic risks across participants around the world. Although hard data are scarce, there can be little doubt that products are tailor-made for the buyer to a larger extent than ever. Gone are the days when Henry Ford could say he would sell a car of any color "so long as it's black."

In such an environment, when product characteristics are bundled together in so many different combinations, defining the unit of output means unbundling these characteristics, and pricing each of them separately. The so-called hedonic technique is designed to do precisely that. This technique associates changes in a product's price with changes in product characteristics. It therefore allows a quality comparison when new products with improved characteristics are introduced. This approach has been especially useful in the pricing of computers. But hedonics are by no means a panacea. First of all, this technique obviously will be of no use in valuing the quality of an entirely new product that has fundamentally different characteristics from its predecessors. The benefits of cellular telephones, and the value they provide in terms of making calls from any location, cannot be measured from an examination of the attributes of standard telephones.

In addition, the measured characteristics may only be proxies for the overall performance that consumers ultimately value. In the case of computers, the buyer ultimately cares about the quality of services that computer will provide--word processing capabilities, database services, high-speed calculations, and so on. But, in many cases, the number of message instructions per second and the other easily measured characteristics may not be a wholly adequate proxy for the computer services that the individual buyer values. In these circumstances, the right approach, ultimately, may be to move toward directly pricing the services we obtain from our computers--that is, word processing services, database management services, and so on--rather than pricing separately the hardware and software.

The issues surrounding the appropriate measurement of computer prices also illustrate some of the difficulties of valuing goods and services when there are significant interactions among users of the products. New generations of computers sometimes require software that is incompatible with previous generations, and some users who have no need for the improved computing power nevertheless may feel compelled to purchase the new technology because they need to remain compatible with the bulk of users who are at the frontier. Even if our techniques allow us to accurately measure consumers' valuation of the increased speed and power of the new generation of computer, we may miss the negative influence on some consumers of this incompatibility. Therefore, even in the case of personal computers, where we have made such great strides in measuring quality changes, I suspect that important phenomena still may not be adequately captured by our published price indexes.

Despite the advances in price measurement that have been made over the years, there remains considerable room for improvement. As you know, a group of experts empaneled by the Senate Finance Committee--the Boskin commission--concluded that the consumer price index has overstated changes in the cost of living by roughly one percentage point per annum in recent years. About half of this bias owed to inadequate adjustment for quality improvement and the introduction of new goods, and about half reflected the manner in which the individual prices were aggregated. Researchers at the Federal Reserve and elsewhere have come up with similar figures. Although the estimates of bias owing to inadequate adjustment for quality improvements surely are the most uncertain aspect of this calculation, the preponderance of evidence is that, on average, such a bias in quality adjustment does exist.

The Boskin commission and most others estimating bias in the CPI have taken a microstatistical approach, estimating separately the magnitude of each category of potential bias. Recent work by staff economists at the Federal Reserve Board has added corroborating evidence of price mismeasurement, using a macroeconomic approach that is essentially independent of the microstatistical exercises. Specifically, employing disaggregated data from the national income and product accounts, this research finds that the measured growth of real output and productivity in the service sector is implausibly weak, given that the return to owners of businesses in that sector apparently has been well-maintained. Indeed, the published data indicate that the level of output per hour in a number of service-producing industries has been falling for more than two decades. It is simply not credible that firms in these industries have been becoming less and less efficient for more than twenty years. Much more reasonable is the view that prices have been mismeasured, and that the true quality-adjusted prices have been rising more slowly than the published price indexes. Properly measured, output and productivity trends in these service industries are doubtless considerably stronger than suggested by the published data. Assuming, for example, no change in the productivity levels for these industries in recent years would imply a price bias consistent with the Boskin commission findings.

A Commerce Department official once compared a nation's statistical system to a tailor, measuring the economy much as a tailor measures a person for a suit of clothes--with the difference that, unlike the tailor, the person we are measuring is running while we try to measure him. The only way the system can succeed, he said, is to be just as fast and twice as agile. That is the challenge that lies ahead, and it is, indeed, a large one.

There are, however, reasons for optimism. The information revolution, which lies behind so much of the rapid technological change that makes prices difficult to measure, will surely play an important role in helping our statistical agencies acquire the necessary speed and agility to better capture the changes taking place in our economies. Computers, for example, might some day allow our statistical agencies to tap into a great many economic transactions on a nearly real-time basis. Utilizing data from store checkout scanners, which the BLS is now investigating, may be an important first step in that direction. But the possibilities offered by information technology for the improvement of price measurement may turn out to be much broader in scope. Just as it is difficult to predict the ways in which technology will change our consumption over time, so is it difficult to predict how economic and statistical science will make creative use of the improved technology.

How Swansea house prices have changed over the last 25 years

Some people in Swansea may have been lucky enough to see the value of their home triple in the past 25 years.

The Land Registry has published data on house prices in Wales for the last quarter of a century, with figures dating back to January, 1995.

And the average house price in Swansea has changed a lot over the past two-and-a-half decades.

Here&aposs how average house prices have compared over the years.

In 1995

For those buying in 1995, the average price of a home in Swansea was £44,365 .

The new earnings survey by the Office for National Statistics put average earnings across the UK for men at around £16,800, and at around £12,300 for women - potentially making homes in Swansea an affordable 2.6 to 3.6 times wages.

From 1995 to 2000, house prices rose by 21% to an average of £53,880 in January, 2000, but it was the next five years that really saw house prices soar.

Between 2000 and 2005, house prices in Swansea doubled to an average of £111,211 , an increase of 106%.

The average wage in Swansea that year, according to data the ONS began recording in 2002, was £17,498.

That made house prices in Swansea a much less affordable 6.4 times wages.

House prices across the UK rose rapidly before the financial crash in 2007, as banks made lending easier through things like 100%+, interest-only and buy to let mortgages and bigger salary multiples, and put much more money into property lending, driving up demand while housebuilding failed to keep pace.

The housing market crash that followed the financial crisis meant slower price growth in Swansea over the next five years - up 15% from 2005 to an average of £127,488 in 2010.

House price growth continued to struggle for the next five years - going up 3% between 2010 and 2015, to an average of £130,928 .

Today&aposs housing market

Recent years have seen slightly faster growth, up 16% from 2015 to an average of £152,423 in 2020.

That means that house prices in Swansea this January were 3.4 times higher than in 1995.

In 2019, which are the most recent figures available, the average wage in the area was £23,019, meaning homes are now 6.6 times higher than incomes.

Inside Wales&apos most expensive rental property that you can live in for £3k a month:

Food and inflation

The Office of National Statistics’ (ONS) Consumer Price Index (CPI) shows that between 1988 and 2005, the cost of food generally rose below the rate of inflation. In 2006, this changed and the cost of food rose above the rate of inflation, before dropping in 2013-14.

Since 2016, food prices have been on the rise again but at a lower rate than inflation (food prices went up 4.3%, whereas all inflation was 5.2%).

Graph showing how food prices have changed in the UK relative to the rising cost of all items (CPI)

Individual food groups give a more detailed picture of what’s been happening. The graph above shows that the price of fish has risen above the rate of inflation since 1988, while meat has risen at a rate lower than inflation.

This means it’s comparatively more expensive to buy fish and cheaper to buy meat than it was 30 years ago. Similarly, oils and fat have become more expensive, but vegetables have got cheaper.

Between 2010 and 2018 the cost of frozen prawns increased by 67% and fresh white fish fillets by 38%. In the same period, the cost of iceberg lettuce decreased by 33% and fresh boneless chicken breasts by 16%.

How America Spends Money: 100 Years in the Life of the Family Budget

You can learn a lot about somebody by looking through his receipts. Is he rich? Is she poor? Where does he shop? What does she value?

Alas, the U.S. economy doesn't come with a receipt. GDP tells us how much stuff we produce. GDI, or gross domestic income, tells us how much money we make. But these numbers don't tell us what the economy looks like from the viewpoint of a typical household.

Fortunately, we have something that's very close to an aggregate receipt for the American family going back more than a century: "100 Years of U.S. Consumer Spending", a report from the Bureau of Labor Statistics.

This is our story today: It is a story about how spending on food and clothing went from half the family budget in 1900 to less than a fifth in 2000.It is a story about how a nation that feels poor got so rich. Here's the big picture in one chart showing the share of family spending per category over the 20th century. The big story is that spending on food and clothes has fallen massively while spending on housing and services has gone up.

The year is 1900. The United States is a different country. We are near the end of the Millennium, but in the "warp and woof of life," we are living closer to the 1600s than the 2000s, as Brad DeLong memorably put it. A quarter of households have running water. Even fewer own the home they lived in. Fewer still have flush toilets. One-twelfth of households have gas or electric lights, one-twentieth have telephones, one-in-ninety own a car, and nobody owns a television.

So where are we spending all our money? Most of our income goes to the places where we work -- to the farm, to the textile mills, and to the house. The typical household haul in 1901 is about $750.

Families spend a whopping 80% of that on food, clothes, and homes.

In 1900, seen from perch of the Bureau of Labor Statistics -- which counts national jobs, income and spending -- the United States is like one big farm surrounded by a cluster of small factories. Almost half of the country works in agriculture. As for the budding services economy: There are more household servants than sales workers. As for the women's rights movement: More than twice as many households report income from children (22%) than wives (9%).

Over the next 100 years, the U.S. family got smaller, more reliant on working women and computers, less reliant on working children and farms, and, most importantly, much richer. About 68-times richer, in fact. Household income (unadjusted for inflation) doubled six times in the 20th century, or once every decade and a half, on average.

But to appreciate the transition in full, let's first meet it halfway.

The year is 1950. Compared to just five decades earlier, the United States is already a different country. The population has doubled to 150 million. The economy's share of farmers has fallen from 40% to 10%, thanks to the mechanization of the farm, led by the mighty tractor. At the same time, food has gotten much cheaper compared to wages, and its share of the family budget has declined from 43% to 30%.

Meanwhile, the "making-stuff" economy is at its apex. Nearly half of working men are craftsmen or operators. (The female labor participation rate is still below 20%.) Factory wages have grown by seven-fold since 1901, and they've nearly tripled since the Great Depression. Textile manufacturing has never been higher and will never be higher. The year 1950 is its exact peak. Apparel manufacturing would grow through the 1970s before collapsing in the last third of the decade. The U.S. was the making-stuff capital of the world, and our dominance probably felt indefinite.

Half a century later, factories, just like farms before them, would become the victims of American efficiency.

It's become fashionable to consider the 1950s a golden age in American economics. Employment was full. Wages were rising. Manufacturing was strong. But if you're the kind of person who likes clothes or food, then welcome to paradise.

In the last 50 years, food and apparel's share of family has fallen from 42% to 17% (and remember, we were near 60% in 1900) as we've found cheaper ways to eat and clothe ourselves. Food production got more efficient, and we offshored the making of clothes to other countries with cheaper labor. As a result, apparel's share of the pie, which hardly changed in the first half of the century, shrank in the second half by two-thirds.

So if the typical American family feels squeezed, what's squeezing us?

I have two answers: The first answer is housing and cars. Half of that orange "other" slice is transportation costs: mostly cars, gas, and public transit. A century ago, if you recall, 80% of families were renters and nobody owned a car. Today, more than 60% of families are home owners, and practically everybody owns a car.*

The other answer, which you can't see as clearly in this chart, is health care. Health-care spending makes up more than 16% of the U.S. economy, but only 6% of family spending, according to the CES. One reason for the gap is that most medical spending isn't out of our pockets. Employers pay workers' premiums and government foots the bill for the elderly and the low-income. Government spending on Social Security, Medicare, and Medicaid has quadrupled since the 1950s in the most meaningful measurement, which is share of GDP.

In short, health care costs are squeezing Americans. But the details of this squeeze elude the color-wheel above. We are paying for health care with taxes, borrowing, and compensation that goes to health benefits, rather than wages.

In 1900, the Bureau of Labor Statistics counted three categories as necessities: housing, food, and apparel. In the last 100 years, we've added to the list. Health care has become necessary. For most people, a car has become necessary. Even higher ed is a necessity for today's middle class.

We have new expectations for what our money should buy. We have earned (literally) the right to expect more from life in America.

Historical context shouldn't cheapen middle class suffering. Today's suffering is real. Unemployment is high. Wage growth is flat. We are squeezed by rising health care costs and scarcity of affordable housing in productive cities.

And yet, who can deny that we are richer? A century ago, we spent more than half our money on food and clothes. Today, we spend more than half of our money on housing and transportation. Our ambitions turned from bread and shirts to ownership and highways. We are all subtle victims of the expectations that 100 years of wealth have bought.

*Even for people who decide not to buy, higher rent costs driven by popular coastal cities, constrictive urban policies, and a shortage of multifamily homes also increase housing costs