Interesting problem. :hmm:
Anyone know a better website than http://eh.net/hmit/ or a method to figure out the current value of pre-modern currencies?
Article has links and charts, so just read it over there.
http://www.froginawell.net/japan/2009/01/when-translating-leave-currency-in-the-original-units/
What is the problem (non-rhetorical)?
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
Quote from: jimmy olsen on March 05, 2012, 05:24:27 AM
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
I tend to avoid explicit numbers like that. They rarely make much sense.
Quote from: jimmy olsen on March 05, 2012, 05:24:27 AM
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
Why would a layman have any need to do such a thing?
I'm confused by the OP and then it including a link that one shouldn't try and "translate" the currency.
Weigh the metal, check the spot price.
Quote from: jimmy olsen on March 04, 2012, 10:08:17 PM
Anyone know a better website than http://eh.net/hmit/ or a method to figure out the current value of pre-modern currencies?
I'm sure you can look up the current Polish exchange rate from The Economist.
Isn't it hokey to try to translate ancient coinage into $/€?
I think that working with equivalencies (enough to feed x people for a year or something) work better to give laymen (including me) an idea of pre-modern monetary amounts.
Hell, even if a book says that something in the year bumfuck BC is the equivalent of $10,000,000 . . . would that be 1910, 1950 or 2012 $$?
I think the best way is to compare an ancient amount of money to what a common ancient Joe would earn in a month or a year. I remember being pretty struck by the fact that in those societies food was so expensive that if you were a non-wealthy town or city dweller virtually all of our income went to food. That really hit home why everything came apart everytime food prices went up even a little bit and why any non-essential goods were almost exclusively made for the elites.
Quote from: Syt on March 05, 2012, 01:00:16 PM
Isn't it hokey to try to translate ancient coinage into $/€?
Yes. As many economists have noted, ancient income amounts do not translate well. The ancients typically had absurd amounts of wealth when measured against the amount of personal labor they could afford, but significantly less wealth when measured against machines and devices. And, of course, there are any number of items they could not buy at any price that we take for granted today.
Ah, found it. Here's an example, just considering Fitzwilliam Darcy rather than the ancients:
QuoteSo how rich is Fitzwilliam Darcy, anyway? What does ten thousand (pounds) a year in the aftermath of the Napoleonic War mean, really?
I have two answers, the first of which is $300,000 a year, and the second of which is $6,000,000 a year.
Consider it first in relative income terms. Output per capita--annual GDP in America today divided by the number of people in America--is valued at some $36,000. Our crude estimates tell us that output per capita in Britain just after the Napoleonic Wars was valued at some 60 pound sterling a year.
Thus in relative income terms--relative to the average of disposable incomes in his society--Fitzwilliam Darcy's 10,000 pounds a year of disposable income gave him about the same multiple of average income in his society as an annual disposable income of $6,000,000 a year would give someone in our society.
On the other hand, my guess is that someone today with a disposable income of $300,000 a year can spend it to get the same utility as Fitzwilliam Darcy could by spending his disposable income of 10,000 pounds a year. This is a guess--a guess that our material standard of living today is some twenty times that of Mr. Darcy's England.
Nevertheless, it is an informed guess. By our standards, early nineteenth century Britain was desperately poor. There are lots of things we take for granted--and that are for us trivially cheap--that Fitzwilliam Darcy could not get at any price. Consider that Nathan Meyer Rothschild, richest (non-royal) man in the world in the first half of the nineteenth century, died in his fifties of an infected abscess that the medicine of the day had no way to treat.
http://delong.typepad.com/sdj/2007/03/how_rich_is_fit.html
Quote from: ulmont on March 05, 2012, 01:11:07 PM
Quote from: Syt on March 05, 2012, 01:00:16 PM
Isn't it hokey to try to translate ancient coinage into $/€?
Yes. As many economists have noted, ancient income amounts do not translate well. The ancients typically had absurd amounts of wealth when measured against the amount of personal labor they could afford, but significantly less wealth when measured against machines and devices. And, of course, there are any number of items they could not buy at any price that we take for granted today.
Ah, found it. Here's an example, just considering Fitzwilliam Darcy rather than the ancients:
QuoteSo how rich is Fitzwilliam Darcy, anyway? What does ten thousand (pounds) a year in the aftermath of the Napoleonic War mean, really?
I have two answers, the first of which is $300,000 a year, and the second of which is $6,000,000 a year.
Consider it first in relative income terms. Output per capita--annual GDP in America today divided by the number of people in America--is valued at some $36,000. Our crude estimates tell us that output per capita in Britain just after the Napoleonic Wars was valued at some 60 pound sterling a year.
Thus in relative income terms--relative to the average of disposable incomes in his society--Fitzwilliam Darcy's 10,000 pounds a year of disposable income gave him about the same multiple of average income in his society as an annual disposable income of $6,000,000 a year would give someone in our society.
On the other hand, my guess is that someone today with a disposable income of $300,000 a year can spend it to get the same utility as Fitzwilliam Darcy could by spending his disposable income of 10,000 pounds a year. This is a guess--a guess that our material standard of living today is some twenty times that of Mr. Darcy's England.
Nevertheless, it is an informed guess. By our standards, early nineteenth century Britain was desperately poor. There are lots of things we take for granted--and that are for us trivially cheap--that Fitzwilliam Darcy could not get at any price. Consider that Nathan Meyer Rothschild, richest (non-royal) man in the world in the first half of the nineteenth century, died in his fifties of an infected abscess that the medicine of the day had no way to treat.
http://delong.typepad.com/sdj/2007/03/how_rich_is_fit.html
I'm not really sure why it matters to take into account objects that didn't exist at the time as part of the equation. After all, saying that Darcy had the equivalent of 6mil today shouldn't really suggest that he'd have all those things that hadn't been invented/discovered yet.
Quote from: garbon on March 05, 2012, 01:26:59 PM
I'm not really sure why it matters to take into account objects that didn't exist at the time as part of the equation. After all, saying that Darcy had the equivalent of 6mil today shouldn't really suggest that he'd have all those things that hadn't been invented/discovered yet.
The more interesting point is that you come up with 6mil or 300k depending on whether you look at share of GDP or amount needed to spend to get equivalent items today, which is such a large slop factor that it makes the analysis little more than a guess.
Quote from: ulmont on March 05, 2012, 01:30:38 PM
Quote from: garbon on March 05, 2012, 01:26:59 PM
I'm not really sure why it matters to take into account objects that didn't exist at the time as part of the equation. After all, saying that Darcy had the equivalent of 6mil today shouldn't really suggest that he'd have all those things that hadn't been invented/discovered yet.
The more interesting point is that you come up with 6mil or 300k depending on whether you look at share of GDP or amount needed to spend to get equivalent items today, which is such a large slop factor that it makes the analysis little more than a guess.
Except that amount needed to spend to get equivalent utility today is sort of a crock given that standards of living have changed (and again in many ways because of items that had not been invented or discovered yet. I don't think anyone goes into this thinking - oh that means Darcy could by X if we he was a live today but simply an attempt to understand what 10,000 pounds a year means as far as relative income.
Sort of like people claiming Marcus Licinius Crassus was one of the richest men in all history.
Granted Warren Buffet does not have his own army.
Quote from: garbon on March 05, 2012, 01:26:59 PM
I'm not really sure why it matters to take into account objects that didn't exist at the time as part of the equation. After all, saying that Darcy had the equivalent of 6mil today shouldn't really suggest that he'd have all those things that hadn't been invented/discovered yet.
Then what does it mean to say that he had the equivalent of 6 million today? The only equivalence is in terms of relative fractions of GDP shares. But since the compositions of those GDPs is completely different, how is that a useful piece of information?
Quote from: The Minsky Moment on March 05, 2012, 02:10:16 PM
Quote from: garbon on March 05, 2012, 01:26:59 PM
I'm not really sure why it matters to take into account objects that didn't exist at the time as part of the equation. After all, saying that Darcy had the equivalent of 6mil today shouldn't really suggest that he'd have all those things that hadn't been invented/discovered yet.
Then what does it mean to say that he had the equivalent of 6 million today? The only equivalence is in terms of relative fractions of GDP shares. But since the compositions of those GDPs is completely different, how is that a useful piece of information?
To be honest, I don't really know. I usually just gloss over any mention of currency in works unless it is compared to other currency amounts in the same time span.
I think to get an idea of how much X amount of money is worth, you need some sort of abstracted Big Mac index that makes sense across time.
- how much would it cost to employ an unskilled labourer for a year? How much of that money would the labourer see for himself (be it in cash, goods or services)?
- what was the fair price to pay a healthy man for the loss of an arm?
- how much money would you have to spend to be acceptably dressed to go to a formal social occasion involving the very elite of the society?
- if you had to spend cash to eat for a month, how much would it cost you to do so as cheaply as possible? How much would it cost you to eat in the manner of someone of the elite?
- what amount of money would roughly be enough for an average city dweller to set himself up for life without having to engage in a profession or labour, with a comfortable standard of living according to the standards of the time?
- what's the price of a cheap fuck from a prostitute? How much to maintain a mistress in style in a cosmopolitan city?
Quote from: Jacob on March 05, 2012, 02:41:15 PM
- what's the price of a cheap fuck from a prostitute? How much to maintain a mistress in style in a cosmopolitan city?
I'd love to see that one on our Consumer Price Index. :lol:
Quote from: crazy canuck on March 05, 2012, 12:16:09 PM
Quote from: jimmy olsen on March 05, 2012, 05:24:27 AM
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
Why would a layman have any need to do such a thing?
Preparation in case of random time-slips. Can't be too careful!
Quote from: Jacob on March 05, 2012, 02:41:15 PM
I think to get an idea of how much X amount of money is worth, you need some sort of abstracted Big Mac index that makes sense across time.
- how much would it cost to employ an unskilled labourer for a year? How much of that money would the labourer see for himself (be it in cash, goods or services)?
- what was the fair price to pay a healthy man for the loss of an arm?
- how much money would you have to spend to be acceptably dressed to go to a formal social occasion involving the very elite of the society?
- if you had to spend cash to eat for a month, how much would it cost you to do so as cheaply as possible? How much would it cost you to eat in the manner of someone of the elite?
- what amount of money would roughly be enough for an average city dweller to set himself up for life without having to engage in a profession or labour, with a comfortable standard of living according to the standards of the time?
- what's the price of a cheap fuck from a prostitute? How much to maintain a mistress in style in a cosmopolitan city?
What you will find if you do exercises like that is that you will get very inconsistent conversion rates.
The basic problem is that our present economy is so fundamentally different from pre-modern ones that these kinds of points of comparisons are so different. Pre-modern wealth consists primarily of command over human bodies and bundles of rights and privileges over land in the context of agrarian based economy. Modern wealth consists of the ability to command the output of complex industrial processes, and the ability to exercise various sets of rights over the operation of institutional agglomerations. You can't really translate one to the other without missing something quite critical.
My main concern is "what amount of money per year equates to an equivalent social class".
As in, I earn X per year as a lawyer, making me upper-middle class, living in a major city. How much would I need to earn in 1820 in (say) England to have roughly the same social position?
Should convert to whores/year.
How many bushels of wheat can the average modern salary buy?
Quote from: Valmy on March 05, 2012, 01:43:58 PM
Sort of like people claiming Marcus Licinius Crassus was one of the richest men in all history.
Granted Warren Buffet does not have his own army.
You're so naive it makes me sick! :mad:
Quote from: Warspite on March 05, 2012, 05:28:29 PM
How many bushels of wheat can the average modern salary buy?
Quite a lot because what is being purchased is the product of an industrialized process using genetically optimized material and transported using modern means. Also quite a lot because on the demand side, wheat competes with maize, potatoes, rice etc. as substitutes and that keeps the price down. A direct comparison to pre-modern Europe could be very misleading.
Quote from: crazy canuck on March 05, 2012, 12:16:09 PM
Quote from: jimmy olsen on March 05, 2012, 05:24:27 AM
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
Why would a layman have any need to do such a thing?
Because folks like us just want to know. I suppose we would fall under educated laymen. Whenever I'm reading a book set around in mid 19th century America and a price is listed I multiply the $ amount by 25 to get a feel for what it costs.
Quote from: jimmy olsen on March 05, 2012, 08:13:24 PMBecause folks like us just want to know. I suppose we would fall under educated laymen. Whenever I'm reading a book set around in mid 19th century America and a price is listed I multiply the $ amount by 25 to get a feel for what it costs.
Multiplying by 25? That does seem very educated indeed :bowler:
I buy a long sword for 5gp, and those fancy pantaloons for 2 sp.
Quote from: Jacob on March 05, 2012, 08:53:31 PM
Quote from: jimmy olsen on March 05, 2012, 08:13:24 PMBecause folks like us just want to know. I suppose we would fall under educated laymen.
Whenever I'm reading a book set around in mid 19th century America and a price is listed I multiply the $ amount by 25 to get a feel for what it costs.
Multiplying by 25? That does seem very educated indeed :bowler:
:D
The two statements were not meant to be connected.
Quote from: Ed Anger on March 05, 2012, 08:54:26 PM
I buy a long sword for 5gp, and those fancy pantaloons for 2 sp.
The guy selling pantaloons hates it when I make him try to give change for a platinum piece. :(
Quote from: Tonitrus on March 05, 2012, 09:52:28 PM
Quote from: Ed Anger on March 05, 2012, 08:54:26 PM
I buy a long sword for 5gp, and those fancy pantaloons for 2 sp.
The guy selling pantaloons hates it when I make him try to give change for a platinum piece. :(
The wagon driver has only change for 1gp.
Its impossible to do.
Just as looking at history in terms of nation states is a broken and faulty way of looking at things so too is trying to apply modern economics to the past.
Quote from: Warspite on March 05, 2012, 05:28:29 PM
How many bushels of wheat can the average modern salary buy?
2 koku worth.
Quote from: jimmy olsen on March 05, 2012, 08:13:24 PM
Quote from: crazy canuck on March 05, 2012, 12:16:09 PM
Quote from: jimmy olsen on March 05, 2012, 05:24:27 AM
Quote from: The Brain on March 05, 2012, 04:01:51 AM
What is the problem (non-rhetorical)?
The difficulty in a layman trying to find out how much a premodern currency is worth in today's currency of choice.
Why would a layman have any need to do such a thing?
Because folks like us just want to know. I suppose we would fall under educated laymen. Whenever I'm reading a book set around in mid 19th century America and a price is listed I multiply the $ amount by 25 to get a feel for what it costs.
But the thing is you won't know anything that's very meaningful. Tip: forget direct comparisons to the present day and get a feel for the era itself.
Is the price he paysimportant to the story :unsure: is this a 19th century consumer fraud tale? :P
He has to sell the bottle cheaper than he bought it.
Quote from: Malthus on March 05, 2012, 03:34:23 PM
My main concern is "what amount of money per year equates to an equivalent social class".
As in, I earn X per year as a lawyer, making me upper-middle class, living in a major city. How much would I need to earn in 1820 in (say) England to have roughly the same social position?
£400 - £1,000 per year would be about right. There are references in literature to indigent curates struggling to feed large families on £120 a year. Meanwhile some of the unmarried characters in Jane Austen's works have incomes of a few hundred a year which make them financially independent. Agricultural labourers got between 10 shillings and 20 shillings a week (20 shillings = £1).
One confusing factor is that prices were high during the Napoleonic wars but then generally fell as the 19th century progressed.
Quote from: The Brain on March 06, 2012, 01:02:10 AMBut the thing is you won't know anything that's very meaningful. Tip: forget direct comparisons to the present day and get a feel for the era itself.
Indeed. Wealth/Values is always relative to the economic environment of the time.
My desk calendar has program/tickets of the World Series 1925 depicted today. Ticket prices: Lower Grandstand $5.50, Center Field Pavillion $3.30.
I have a feeling that it was pretty big money at the time.
Quote from: Syt on March 06, 2012, 01:50:57 AM
Quote from: The Brain on March 06, 2012, 01:02:10 AMBut the thing is you won't know anything that's very meaningful. Tip: forget direct comparisons to the present day and get a feel for the era itself.
Indeed. Wealth/Values is always relative to the economic environment of the time.
Yes. The zone of upper middle-class incomes I mentioned is the area where people would think of setting up a carriage. This would be crippling at £400pa and relatively ok at £1000pa. Contrast this to modern times where we can "set up our carriage" for a pittance.
Quote from: Syt on March 06, 2012, 01:53:15 AM
My desk calendar has program/tickets of the World Series 1925 depicted today. Ticket prices: Lower Grandstand $5.50, Center Field Pavillion $3.30.
I have a feeling that it was pretty big money at the time.
Those prices do indeed seem very high for the times.
Quote from: The Minsky Moment on March 05, 2012, 07:04:18 PM
Quote from: Warspite on March 05, 2012, 05:28:29 PM
How many bushels of wheat can the average modern salary buy?
Quite a lot because what is being purchased is the product of an industrialized process using genetically optimized material and transported using modern means. Also quite a lot because on the demand side, wheat competes with maize, potatoes, rice etc. as substitutes and that keeps the price down. A direct comparison to pre-modern Europe could be very misleading.
Hmm. Should the government do anything about this grain inflation? :hmm:
Found a good website for this. It converts pounds sterling from every decade from 1270 to 1970 into the equivalent amount in 2005. However, that being a quite inaccurate indication of purchasing power, it also has tool to calculate that.
http://www.nationalarchives.gov.uk/currency/
Since Fitzwilliam Darcy was mentioned early, I'll use him as an example.
£10,000 pounds in 1810 was equal to only £339,600 in 2005, however it's purchasing power was immense, equivalent to
66,666 x the daily wage of a craftsman in building trade
or 11,111 stones of wool
or 1,757 quarters of Wheat
or 2,000 cows
or 952 horses
Quote from: garbon on March 05, 2012, 02:16:04 PMTo be honest, I don't really know. I usually just gloss over any mention of currency in works
No, we know this. :P
Anyway, I'd go as far as to say "practically nothing." With arms that could be purchased for less than a million dollars, the GDP of the Roman Empire could be at our disposal. That's the true exchange rate, and the one they favored themselves.
Surely it makes the most sense to compare vs. other people's incomes living at the same time and same society. That way, you'll always be comparing apples to apples.
In regards to the layman's need to convert it.... It's usually pretty easy to get a rough sense of what the person's income means for them by the standards of their society, and that is good enough for laymen. Thus Mr. Darcy has his own estate, and his yearly income makes Elizabeth Bennett all wet when she finds out, so it's pretty safe to conclude it's a rather significant sum.
Hmph. War never changes.
200,000 dollars was a lot of money. Apparently they were gonna have to earn it.
Quote from: Pitiful Pathos on November 09, 2013, 08:13:06 AM
In regards to the layman's need to convert it.... It's usually pretty easy to get a rough sense of what the person's income means for them by the standards of their society, and that is good enough for laymen. Thus Mr. Darcy has his own estate, and his yearly income makes Elizabeth Bennett all wet when she finds out, so it's pretty safe to conclude it's a rather significant sum.
Yeah which is why we don't actually need to convert it. You can take enough cues from how the characters react to the sums.
Quote from: Ideologue on November 09, 2013, 08:03:03 AM
Quote from: garbon on March 05, 2012, 02:16:04 PMTo be honest, I don't really know. I usually just gloss over any mention of currency in works
No, we know this. :P
I'm missing the joke. :(
Mild swipe at your anti-minwage agitprop.
Quote from: garbon on November 09, 2013, 10:10:15 AM
Quote from: Pitiful Pathos on November 09, 2013, 08:13:06 AM
In regards to the layman's need to convert it.... It's usually pretty easy to get a rough sense of what the person's income means for them by the standards of their society, and that is good enough for laymen. Thus Mr. Darcy has his own estate, and his yearly income makes Elizabeth Bennett all wet when she finds out, so it's pretty safe to conclude it's a rather significant sum.
Yeah which is why we don't actually need to convert it. You can take enough cues from how the characters react to the sums.
I need to know exactly how much Pemberly estate would fetch on the open market in Deutschmarks circa 1987! :mad:
I don't think the edit made it better.
I've always found them suspect. Coinage was going to have a different meaning in Venice than in rural Bosnia in the 17th Century, and the 18th Century Dutch and Chinese had different problems of scarcity.
Quote from: Syt on March 06, 2012, 01:53:15 AM
My desk calendar has program/tickets of the World Series 1925 depicted today. Ticket prices: Lower Grandstand $5.50, Center Field Pavillion $3.30.
I have a feeling that it was pretty big money at the time.
Approximately $73.59 and $44.15 in 2013 dollars.
Baseball got more expensive.
Quote from: Queequeg on November 09, 2013, 02:53:21 PM
I've always found them suspect. Coinage was going to have a different meaning in Venice than in rural Bosnia in the 17th Century, and the 18th Century Dutch and Chinese had different problems of scarcity.
Translating modern monies to monies from 150 years ago has enough pitfalls. Trying to figure out pre-modern currency is a fool's errand. It's like trying to figure out how many viking swords are equivalent to an ICBM.
Quote from: Razgovory on November 09, 2013, 03:24:27 PM
It's like trying to figure out how many viking swords are equivalent to an ICBM.
An ICBM can only be used once. Swing one sword enough times, and you can kill more people :smarty:
One can translate pre-modern currencies into modern equivalents. There are pitfalls, of course, but it can be done meaningfully. While many commonly-accepted modern uses for money would be meaningless in, say, 1820 (medical care or home climate control, for instance), many others would not (the cost of a day of skilled labor, or six ounces of good whiskey, or x amount of wine). The chief problem is in the interpretation, not the translation.
Ultimately, though, I think garbon is right: it is better to rely on the reactions of contemporaries than to go through then bother of a translation that you might then misinterpret.
Quote from: MadImmortalMan on November 09, 2013, 03:20:33 PM
Approximately $73.59 and $44.15 in 2013 dollars.
Baseball got more expensive.
Outfield seats now cost more than $44? When did this happen? :huh:
That was for the World Series. Cheapest tickets this year were just under $300.
http://www.forbes.com/sites/jesselawrence/2013/10/20/red-sox-world-series-tickets-81-higher-than-cardinals-tickets-for-fall-classic/ (http://www.forbes.com/sites/jesselawrence/2013/10/20/red-sox-world-series-tickets-81-higher-than-cardinals-tickets-for-fall-classic/)
Quote from: Queequeg on November 09, 2013, 02:53:21 PM
I've always found them suspect. Coinage was going to have a different meaning in Venice than in rural Bosnia in the 17th Century, and the 18th Century Dutch and Chinese had different problems of scarcity.
Well, number one is still true to day. Prices in NYC aren't the same as prices in Wyoming.
For luxury goods sure. Put the basics of food and shelter are the same the world over, even if the specific foods being eaten are different.
I kon what a traditional silver shekel is worth.
I fucking hate tis fucking spellin bullishit !!
I like to ,mispellQQQQ!!!!!
I stand by my earlier comments in the thread. The problem with these exercises is one is still comparing the incommensurable.
Victor Hanson used the comparitor of a day's wages for semi-skilled labor in his book about the Pelopenesian War, and I was OK with that.
Quote from: Admiral Yi on November 11, 2013, 11:45:27 AM
Victor Hanson used the comparitor of a day's wages for semi-skilled labor in his book about the Pelopenesian War, and I was OK with that.
That's OK if you want to give some idea say what the burden of purchasing and maintaining basic hoplite equipment would be for a typical citizen-farmer. But not so useful if you are trying to find out whether Croesus was richer than Rockefeller.
Given the competition, I don't see why not. Croesus could buy X days of semi-skilled labor; Rockefeller could buy Y.
I always find it an issue with Victorian novels. They're almost always honest so normally about love and money.
This site helps:
http://www.nationalarchives.gov.uk/currency/
Found a better website for this
Using Mr. Darcy as the example, the middle two values are likely best to understand his social standing as seen in the book.
https://www.measuringworth.com/
QuoteIf you want to compare the value of a £10,000 0s 0d Income or Wealth , in 1811 there are four choices.
In 2016 the relative:
historic standard of living value of that income or wealth is £665,900.00
labour earnings of that income or wealth is £7,868,000.00
economic status value of that income or wealth is £8,811,000.00
economic power value of that income or wealth is £43,390,000.00
Methodology
https://www.measuringworth.com/worthmeasures.php
QuoteClearly, intrinsic values, objects, or events are difficult, if not impossible, to measure in money terms. There is probably no objective way of assessing the worth of freedom of speech or of the love of your life or of a beautiful sunset. Such items lack a well-defined money amount associated with them. Therefore we do not attempt to measure the worth of such items. Also, we cannot measure the worth even of an item associated with a money amount, if the time period (say, year) of that money amount is not clearly established. What is the worth today of "a loaf of bread produced or consumed sometime in the past"? Such an incompletely phrased question cannot be answered.
We are concerned with measuring the worth of items with which both a monetary value and a past time period are clearly associated. Examples are: A loaf of bread sold for seven pennies in 1915; what is its "value" today? Your great-grandfather's estate was $1000 or £200 in 1900; what is that worth today?
Undoubtedly, the worth of such monetary amounts is also difficult to measure. However, as long as a purchase, wage, or any transaction, or wealth or other asset has an associated monetary amount and date recorded, there is hope.
In most cases, if the transaction takes place today or the asset is in existence today, and if the money amount involved is in a range with which we are accustomed, then this discussion is considered trivial. In that case, we consciously or subconsciously, compare the transaction or asset amount with similar transactions or assets. This is an application of what economists call "opportunity cost". For example, the £10 or $20 that one pays for a hard-covered book is "worth" any one of a multitude of other things that we know costs that same amount, be it a DVD, nice bottle of wine, or a clock radio.
When the transaction or asset is not in a range we with which we are familiar, such as 100 million dollars or pounds, or if the transaction or asset occurred or existed in a time different from that in which we live or can remember, then it is much harder to "know" the comparables. There is yet another problem: one person's "comparable" could be quite different from that of another person. The worth of an amount of money sufficient to buy enough macaroni and cheese to last a week for a very poor person could be merely a tip to a doorman for a wealthy one.
The technique we use is to apply alternative monetary scales or indicators from the desired (later or present) year to an item in the initial (past) year. The result (for each alternative) is a value that has been adjusted (usually increased) by the growth in the indicator. This is the meaning of relative worth over time. Always remember that it is the item in the initial year for which the relative value is calculated. That item, or even something comparable to it, may not exist in the desired year. No matter; relative worth of the past item is still computable.
Because of these issues, we created a set of "measures of worth" that depend on two things: (1) the type of transaction or asset, called the "subject" and (2) the appropriate comparable, called the "indicator". Which measure (that is, which of the alternative results) is best depends on a proper identification of both the subject and the indicator.
Indicators
While there can be a large number of indicators, we present six common ones here, that can be classified into four types.
1. Prices. There are two general price indicators used here, the consumer price index (CPI) and the gross domestic product (GDP) deflator. The CPI, or the retail price index (RPI), involves a bundle of commodities confined to consumer goods and services. This bundle is a fixed amount of food, housing, clothing, entertainment, etc., that is proportional to what the average household consumes. The GDP deflator involves a bundle of commodities that incorporates all output in the economy including consumer goods and services, investment goods, and government-provided goods and services.
The CPI or RPI is obtained via direct index-number construction, based on surveys of household expenditures and prices of consumer items. The GDP deflator is computed as the ratio of nominal GDP to real GDP. The CPI, RPI, and GDP deflator increase over time, in line with inflation.
2. Household Consumption. The CPI measures the cost of a fixed bundle of household consumption. However, over time, incomes grow and the amount households spend increases. The Value of the Household Bundle (VHB) is the measure of the total amount that the average household spends on goods and services in a given year. Over time this indicator increases for two reasons: households both purchase more consumables (higher standard of living) and the prices of consumables increases (inflation).
3. Income. There are two income indicators: the wage and per-capita GDP. Wage is compensation for labor. Per-capita GDP is economy-wide total output divided by population. Because only part of output goes to labor, per-capita GDP is generally larger than average wage.
4. Output. The total output of an economy is measured by Gross Domestic Product (GDP), the market value of all goods and services produced in a year.
Subjects
There are three classes of subjects:
A. Commodity. A good or service, usually purchased by a consumer. In this category are such items as bread, a restaurant meal, an automobile, a tax paid, or a charitable contribution.
B. Income or Wealth. A flow of income (wages, profits, interest, rent) or wealth (a financial or real asset or liability).
C. Project. A business or government investment (such as construction of a canal or installation of a cable network) or a government expenditure (such as financing social security or a war). Certain consumer or non-profit expenditure, such as creation of a charitable foundation, can also be defined as a project.
Measures of Worth
SUBJECTS INDICATORS
Price Index Value of Household Bundle Income GDP
Commodity (1) Real price (2) Real value (3) Labor or income value (4) Share
Income or Wealth (5) Historic standard of living (6) Contemporary standard of living (7) Economic status (8) Economic power
Project (9) Historic opportunity cost (10) Contemporary opportunity cost (3) Labor or income value (4) Share
(1) Real Price measures a subject (a commodity) against the cost of a bundle of goods and services that in principle is fixed though in practice varies over time.
(2) Real Value measures a subject (a commodity) relative to the "value of the household bundle" (VHB).
(3) Labor Value or Income Value measures a subject (commodity or project) against a specific wage or more-general income, such as the average wage rate or per capita GDP.
(4) Share measures the consumption or production of a subject (commodity or project) against the output of the economy as measured by GDP, that is, the given monetary amount is computed as a percent of GDP. This measure indicates opportunity cost in terms of the total output of the economy. The viewpoint is the importance of the item to society as a whole, and the measure is the most aggregate of all the measures. One would rarely use this measure for a commodity. The exception would be if the amount (of the commodity) was a significant share of GDP, such as potatoes in Ireland in the mid-19th century.
(5) Historic Standard of Living measures a subject (income or wealth) against the cost of a "fixed" bundle of consumer goods and services (the CPI or RPI) or the cost of all goods and services (the GDP deflator.)
(6) Contemporary Standard of Living measures a subject (income or wealth) against the value of the household bundle (VHB).
(7) Economic Status measures a subject (income or wealth) relative to a wage or more general income, such as the wage rate of workers in manufacturing or per-capita GDP. Note that the specific measures are identical to those in measure (3) above, but the kinds of subjects differ.
(8) Economic Power measures a subject (income or wealth) against the total output of the economy, measured by GDP. What is being addressed is the "economic power" of the person to whom the item pertains, the ability to influence the composition or total-amount of production in the economy (GDP).
(9) Historic Opportunity Cost measures a subject (generally a project) against a bundle of consumer goods and services (via the CPI or RPI) or a bundle of all goods and services (using the GDP deflator.) For a project of a person or household, the CPI or RPI is preferred. For investment and government projects, the GDP deflator is more appropriate.
(10) Contemporary Opportunity Cost measures a subject (always a project) relative to the VHB. Although the VHB, the average expenditure of households, is the measure, the project-item may pertain either to business/government, a person/household, or to a nonprofit institution.
Examples from 1931
In this section we report the relative worth of three subjects in the United States in 1931, the "initial year". The year 1931 is selected because it was a year of a memorable event: completion of construction of the Empire State Building, in New York City. For 40 years, this structure was the tallest building in the world. Also, 1931 is a year far enough in the past so that most of us have no memory of it and therefore cannot think in terms of what he or she remembers "things cost then".
The Empire State Building is clearly a "project". The other subjects are mundane: a loaf of bread (a commodity) and the earnings of an accountant (an income). The table below summarizes the relative worth of these 1931 subjects in 2009 (the "desired year").
QuoteTable wouldn't come out right, please visit the website to look at it
* This may not be a useful answer, although it is interesting to know that a loaf of bread was a much larger share of output in 1931 than bread is today.
In 1931, a one-pound loaf of white bread, on average over several major cities, was priced at 7.7 cents. Regardless of how much money someone has, the relative cost of the 1931 loaf of bread in terms of food or household items is about a dollar today (using the CPI index).
If you are interested in comparing how much of the average shopper's budget went for bread, then $2.42 (which uses the "value of the household bundle") would be the appropriate figure.
Finally, if you were trying to figure out the amount of income from which people purchased a loaf of bread, then $5.79 is the answer for the average person. For the unskilled worker then, the purchase cost in today's money is about $3.24. For a production worker, $3.93. Remember, we are taking today's income or wage scale back to 1931 to look at the price of a loaf of bread.
The average earnings of an accountant were $2,250 and in terms of what goods and services an accountant could buy in 1931, he (there were few women accountants) received a historic comparative purchasing power of $31,700 in current dollars (using the CPI index).
His contemporary standard of living was over twice that amount, or $70,700. This is about 40 percent more than the average household bundle today, showing a high buying power.
Finally, with his $2,250 salary, the accountant enjoyed an economic status of close to $170,000 in current terms and an economic power of close to $420,000. The interpretation is that his wage enabled him to go to the same country club as someone today earning $170,000 and that he would be perceived to have the same economic influence as someone with a current annual income of a almost half a million dollars.
The Empire State building, a giant of a structure in its day, was built at a cost of $40,948,900. This may seem inexpensive in today's terms when we compare its cost using the GDP deflator and determine a contemporary cost of $490 million.
Alternatively, the cost in terms of the goods and services the average household implicitly gave up, was $1.3 billion in today's money and the "labor" value of the building was $2.1 billion in today's production worker wages.
Finally, if you want a current-dollar indicator of how important the building was compared to other projects in New York City when the Empire State Building was completed, then a number close to $7.6 billion is the best number.
All the measures discussed here first appeared in our article "Better Measurements of Worth", Challenge: The Magazine of Economic Affairs, Vol. 49, No. 4 (July/August 2006), pp. 86-110.
We acknowledge a great intellectual debt to Adam Smith, who in 1776 (in The Wealth of Nations) wrote:
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people... But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated... Every commodity, besides, is more frequently exchanged for, and thereby compared with, other commodities than with labour.
Adam Smith also saw the "power" concept of worth. He states: "a great fortune... The power which that possession immediately and directly conveys to him, is the power of purchasing; a certain command over all the labour, or over all the produce of labour, which is then in the market".
[italics added by us]
Quote from: The Minsky Moment on March 05, 2012, 03:07:59 PM
What you will find if you do exercises like that is that you will get very inconsistent conversion rates.
Like, for example, a variance from 665K to 43M. That's a pretty big difference, big enough to be effectively useless.
If you want "to understand his social standing as seen in the book," then it's a lot more useful to compare against contemporaries of that time period. Austen's own work provides plenty of material In particular, Darcy's 10K can be compared against the 500 pounds per year for the Dashwoods, sufficient to keep a family in a comfortable house with servants (if not in the lap of luxury), or - borrowing from Sense and Sensibility - the 4K/yr that allows the Dashwoods to run a large luxurious estate. Austen's England is one that at the elite level is oriented around the maintenance of large country estates. Numerical wealth is really just a way of signifying the scale of the estate. "10,000" is Austen's way of saying Darcy is very rich - not as rich as the Queen or the very greatest magnates of the land, but considerable richer than the typical wealthy gentryman. That's it. In contemporary terms he is like the people in Trump's cabinet that can afford their own private plane. The numerical calculations give a false sense of precision, they confuse more than they reveal.
In 1924 The University of Texas built their new football stadium for $275,000.00. It was renovated last year to add a new subterranean practice facility under the north end and a new academic center in the office part of the building. This tweak, not even visible to anybody using the facility on gameday, cost $ 62 million dollars.
A loaf of bread that cost 7 cents in 1931 would be worthless today. Gross.
Quote from: The Minsky Moment on October 10, 2017, 09:24:42 AM
Quote from: The Minsky Moment on March 05, 2012, 03:07:59 PM
What you will find if you do exercises like that is that you will get very inconsistent conversion rates.
Like, for example, a variance from 665K to 43M. That's a pretty big difference, big enough to be effectively useless.
The 665k is useless, less so the others I think since they measure specific values in context that are more easily translated to modern day.
I'm glad that Tim has made good use of intervening 4 years.
Quote from: Razgovory on October 10, 2017, 09:35:08 PM
I'm glad that Tim has made good use of intervening 4 years.
:rolleyes: It wasn't like I was working on this for 4 years.
It's ok, Tim, we know you took weekends off.