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01 / 05
Time Pricing Mark Perry’s Chart of the Century

Blog Post | Cost of Living

Time Pricing Mark Perry’s Chart of the Century

Between 2000 and 2023, hospital services became 37.7% less abundant while TVs became 10,090% more abundant.

Line graph displaying price changes in selected US consumer goods and services between 2000 and 2023

Mark Perry, an economics professor at the University of Michigan, regularly publishes a chart illustrating the percentage change in the nominal prices of a variety of US consumer goods and services. He also notes the change in average hourly wages. His data come from the Bureau of Labor Statistics. This is a great chart, but note that prices can increase to infinity but can only decrease by 100 percent (and then they become free).

We have compared each product to the change in average hourly wages to get the change in the time prices. The times prices are then compared over time to measure changes in abundance. This bar chart illustrates these changes.

Graph displaying the percentage change in abundance of selected US consumer goods

Products and services that became less abundant are subject to high levels of government interference on both the demand and supply sides.

This chart does not include TVs. The time price of TVs decreased by over 99 percent. For the time it took to earn the money to buy one TV in 2000, you can get 101.9 TVs today. TV abundance increased by 10,090 percent. The horizontal scale would be 12 times wider if we included TVs, and everything else would look tiny.

Over this 23-year period, overall inflation increased by 82.4 percent while average hourly income increased by 114 percent. Hourly income increased 38 percent faster than prices. This indicates a 14.8 percent decrease in overall time prices. You get 17.3 percent more today for the same amount of time 23 years ago.

This illustrates the fact that things can get more expensive and more affordable at the same time. As long as hourly wages are increasing faster than product prices, time prices are decreasing, which is another way of saying personal abundance is increasing.

The iPhone also is not included in this chart. In 2000, the iPhone was seven years away. It is difficult to measure how much abundance this innovation has created. To get an idea, ask yourself how much someone would have to pay you to never use a mobile phone again. Yes, you are a multimillionaire.

Time prices are a better way to measure standards of living. To really understand our economy, we must move beyond thinking in dollars and cents to thinking in hours and minutes. Time prices are the true prices.

This article was published at Gale Winds on 1/31/2024.

Curiosities | Cost of Living

The Real Reasons Your Appliances Die Young

“Many people have a memory of some ancient, avocado-green washing machine or refrigerator chugging along for decades at their grandparents’ house. But even then, decade-spanning durability was uncommon.

Although I couldn’t find a ton of hard data on appliance lifespan over the past 40 years, nearly everyone I spoke with — service technicians, designers, engineers, trade-organization representatives, salespeople — said that kind of longevity was always the outlier, not the norm.

‘Everybody talks about the Maytag washing machine that lasts 50 years,’ said Daniel Conrad, a former product engineer at Whirlpool Corporation who is now the director of design quality, reliability, and testing for a commercial-refrigeration company. ‘No one talks about the other 4.5 million that didn’t last that long.'”

From New York Times.

Buenos Aires Times | Macroeconomic Environment

Inflation in Buenos Aires City Slows to Monthly 1.6 Percent

“Consumer prices in Buenos Aires City rose 1.6 percent in May, lower than the expectations of most analysts and a slowdown from the previous month.

The news will be welcomed by President Javier Milei’s national government, which is awaiting the publishing of the INDEC national statistics bureau’s national figure later this week.

According to data from the Buenos Aires City Statistics Office, prices in the capital were up 1.6 percent, down from the 2.3 percent recorded in April. Most private consultancy firms expected a rate of around two percent.

Inflation so far this year in the capital totals 12.9 percent – a massive drop on the 48.3 percent recorded over the same period in 2024.”

From Buenos Aires Times.

Curiosities | Trade

The Real Story of the “China Shock”

“The total number of jobs remained largely stable in the U.S.—and even slightly increased—as people adapted to competition from Chinese trade. Trade-exposed places recovered after 2010, primarily by adding young-adult workers, foreign-born immigrants, women and the college-educated to service-sector jobs.

Lost in the alarm over jobs is that trade with China delivered substantial benefits to the U.S. economy. Most obvious are the lower prices Americans pay for everything from clothing and electronics to furniture. One study found that a 1 percentage point increase in imports from China led to about a 1.9% drop in consumer prices in the U.S. For every factory job lost to Chinese competition, American consumers in aggregate gained an estimated $411,000 in consumer welfare. This so-called Walmart effect disproportionately helped middle- and lower-income families, who spend a bigger share of their budget on the kinds of cheap goods China excels at producing.

U.S. businesses also reaped advantages. Manufacturers who use imported parts or materials benefited from cheaper inputs, making them more competitive globally. An American appliance company, for example, could buy low-cost Chinese components to lower its production costs, keep its product prices down and potentially hire more workers.”

From Wall Street Journal.

Curiosities | Cost of Services

Service Costs Aren’t Exploding Anymore

“The trend of increasing service costs defined many of our economic debates for a decade. There was just one small problem — by the time we started talking about how to address this trend, the trend had changed…

Until around 1990, health spending rapidly ate up a bigger and bigger portion of our national income. Then the increase slowed down, but it did go up some more until around 2009. But after that, it leveled off; in 2024, Americans didn’t spend a greater percent of their income on health care than they did in 2009…

Higher education has been getting more affordable for years, and the decrease in affordability in the late 2000s and 2010s was significantly overstated. The popular narrative that college is getting less and less affordable is wrong…

These changing trends don’t mean that services are cheap and we can stop thinking about service costs. First of all, there are still some services that are getting less affordable over time — most notably, child care. Second, the recent mild increases in affordability for health care and higher education haven’t erased the big cost increases that happened in the 1980s, 1990s, and early 2000s; Americans still pay a lot more for these things than Europeans or Asians do, relative to their incomes. So there’s still probably scope to bring down the costs of health care and college.

But with all that said, the change in the trends in service costs and service productivity mean that our debates about these topics need to change.”

From Noahpinion.