Wednesday, January 14, 2009

More Choice, Better Selection, Much Lower Prices

Cost of a Sears Washer in 1949: $104.95 or 83.3 hours of work (10.5 days or 2.1 weeks) at the average hourly manufacturing wage of $1.26.

Cost of a Sears washer in 2009: $322.99 or 17.9 hours of work (2.2 days) at the average hourly manufacturing wage of $18.03.

Bottom Line: If we paid the same price today as in 1949 (83.3 hours at the average hourly wage of $18.03), the 2009 Sears washer above would cost us $1,502.

Several commenters on this CD post about toasters suggested that the 1949 toaster is of better quality than today's toasters. Maybe. I don't think anybody would make the same claim about the 1949 washer. Would anybody really trade their current washer for the one pictured above from 1949 that requires manual wringing?

Another commenter quibbled about the difference between a basic toaster and a more deluxe model. Well, here's something to consider: The 1949 Sears catalog offered 2 or 3 models of toasters, 5-6 different refrigerators, and 2 or 3 different models of washers, so there really wasn't much of a difference back then between basic and deluxe. The 2009 Sears website offers something like 167 different washing machines, more than 100 different toasters, and more than 1,000 different refrigerators. So not only are today's household appliances much, much cheaper than in 1949, we have significantly more choice today.

And for many, many items (like washers or refrigerators) today's basic model was yesteryear's deluxe model, and in many, many cases today's basic model is far better than yesteryear's deluxe model (washing machines).

17 Comments:

At 1/14/2009 10:24 AM, Anonymous Anonymous said...

Another commenter quibbled about the difference between a basic toaster and a more deluxe model

It's not a quibble, Perry. It's your inability to admit your normative priors.

 
At 1/14/2009 10:37 AM, Blogger The Right Guy said...

It depends on what you buy. Take cars, you can buy a Yukon that costs 32K or one that costs 50K and combinations in between. The same with washing machines. My dad paid $2700 for a new vista cruiser in 1967. To buy a similar vehicle today would be almost 10x as much. I doubt his salary would be 10x today. Much of this type of inflation is hidden in consumer credit. My dad paid cash back then. It's much more difficult to do that now. While credit has inflated the economy, I think it's a wash when you consider that people are essentially in peonage for it. While we had less back then than we do now, we owned it then.

 
At 1/14/2009 11:43 AM, Anonymous Anonymous said...

My mother used a washer with a manual wringer. Many women got their hands caught in those things.

Right guy, get real.

 
At 1/14/2009 11:56 AM, Blogger The Right Guy said...

Get real about what? Your the one who posts anonymous.

 
At 1/14/2009 11:58 AM, Anonymous Norman said...

This comparison and all other should include TAXES or else its meaningless.

 
At 1/14/2009 12:08 PM, Blogger PeakTrader said...

Obviously, goods are more affordable today. Also, there have been tremendous quality improvements. For example, computers today are much better than computers 30 years ago. Moreover, how do you compare a microwave oven to one 30 years ago. You can't. They didn't exist.

Furthermore, many large firms today didn't exist 30 years ago or were much smaller with few basic products, e.g. Microsoft, Intel, Apple, Google, Genentech, etc.

 
At 1/14/2009 12:25 PM, Blogger The Right Guy said...

As someone that works on and with computers, Apple's products were much better 20 years ago from a construction point of view. The engineering has gotten cheaper and more focused on design. The thing you have to consider for everything, and I believe you tried, is that you have to judge them within the context of the time they existed. They didn't have 2.6 GHz processors 20 years ago and very few cars had fuel injection 30 years ago. Microwaves did exist 30 years ago.

 
At 1/14/2009 12:34 PM, Blogger PeakTrader said...

You're correct, Microwave ovens existed 30 years ago. From Wikipedia:

"By 1986, roughly 25% of households in the U.S. owned a microwave, up from only about 1% in 1971. Current estimates hold that over 90% of American households have a microwave.

 
At 1/14/2009 1:24 PM, Blogger fboness said...

Right Guy,

From the late '60s to my retirement, my pay went up 28x. Looking at the rest of my cohort, that seems about ballpark.

I've paid cash for every car I have owned from back then to right now. That never seemed difficult.

 
At 1/14/2009 1:28 PM, Anonymous Anonymous said...

The Beetle was a terible car, but it was eminenetly rpairable and recycllabel. I wish I could say the same for my wife's Jetta, which gets the same mileage (and has 5X the HP, AC, etc.).

You compared costs in terms of work time to buy the same (or euqivalent product).

What would be the equivalent cost in terms of embedded energy?

I'd guess that more energy goes into the newer products, and less production labor. But I would also gues that the energy is pretty much proportional to weight.

Are today's products cheaper because they represent more use of fossil fuel?

 
At 1/14/2009 2:13 PM, Blogger John Thacker said...

The thing you have to consider for everything, and I believe you tried, is that you have to judge them within the context of the time they existed. They didn't have 2.6 GHz processors 20 years ago and very few cars had fuel injection 30 years ago.

No, you don't have to judge them within the context of the time they existed. That's one type of meaningful comparison, to be sure, but sometimes it's worth taking a step back and saying, "No, even the cheap cars of today are better than that 1967 vista cruiser." It's ridiculous to claim that one has to look at things just from a "construction point of view" in the case of Apple's-- that IIe may last forever, but who wants one now?

 
At 1/14/2009 2:55 PM, Anonymous Dennis B said...

The problem with the analysis is that it fails to take into consideration the tax rate, federal wage tax, state wage tax, and sales tax. Even with these corrections they show that we get a lot of stuff a lot cheaper than we did back then.

 
At 1/14/2009 3:20 PM, Blogger B-Daddy said...

This is a classic problem in economics, to the cost of like problems from different eras. It was tackled by William Nordhaus in 1998 in a paper on the unit cost of a lumen, a measure of light flux, i.e. photons per unit of time. Neither photons nor time have changed significantly over the course of the study. Not surprisingly, Nordhaus concludes that traditional economic measures significantly underestimate the cost benefits of quality improvements over time. His study showed that the cost of a lumen had declined by a factor of almost 400 since 1800.

The study is a bit of a slog, but it is worth looking at the tables and graphs. I remember an article in The Economist on this some years ago.

 
At 1/14/2009 6:34 PM, Blogger The Right Guy said...

Fboness"
My pay has gone down since 2001 (although it has been in the upswing, I am still down about 25K). I can't say anything about the 60's, as I was a kid. My dad was a civil servant, so his salary increases were predictable, but small and he retired in 1987 at around 40-45k I would think.

John Thacker:
I wasn't talking about Apple's, but Macintoshes. Some of those old ones were made very well. May be you wouldn't want to use one now, but I'll tell you what, I could get just as much word processing done on my Classic II with Word 5.1 as I can with my Mac Book with the bloatware 2008. These new intel machines are throwaways. I can still boot my Classic II, do you think my Mac Book will be working in 17 years?
Anonymous:
My first car was a 1969 VW Fastback. The fuel injection was a pain to keep going and in general, it required a lot of TLC. I drive a 2001 Jetta now and it has been very reliable, much better than our 2003 Windstar, but even maintenance items aren't cheap. Luckily I do all my own work.

 
At 1/14/2009 7:06 PM, Anonymous steep said...

I would be interested in a comparison of bicycles. My parents bought one for me in 1978 from Sears for the same price that I paid for Wal-Mart models for my kids in 2003 (or even today - $69).

Construction and features were a whole lot better on the new bikes.

My kids are lucky.

 
At 1/14/2009 7:40 PM, Anonymous poor boomer said...

I doesn't always work out so well for all market segments.

I was priced out of the PC market for several years, new system advances made earlier computers cheaper, but just when the 'old' system would approach a price I could afford, manufacturers stopped building new ones.

It took me until 1992 to be able to afford a computer; I assembled a 286/XT from parts I bought at a trade show.

Even modern computer technologies like
sound and broadband evaded my grasp until months ago.

 
At 1/15/2009 2:24 PM, Blogger @sethstorm said...


More Choice, Better Selection, Much Lower

...Quality.


The 2009 Sears website offers something like 167 different washing machines, more than 100 different toasters, and more than 1,000 different refrigerators

All of which are re-brands of some third-world brand. I'd like to know how many brands would exist and if any are not third-world(e.g. China, India, SE Asia, Latin America) in origin.


For example, computers today are much better than computers 30 years ago.

More features, lower quality. Don't confuse the two.

 

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