Things Were So Cheap Back Then!... or were they?
If ever there was a myth about history it would be this: Things were dirt cheap back then.
And this is where I rub my hands together and cackle with geeky glee. Just like we shouldn't judge our ancestors solely based on current standards and social norms, we shouldn't judge prices of yesteryear by today's dollar value.
I'll give you some examples.
(And don't worry. I'm not going to get super technical or get all crazy on the math, because Math is not my strongest subject. I'll fully admit I got my math-savvy husband to help me remember the equations I learned from my college economics class.)
I was looking in one of my Health-for-Victory meal planning guide from 1943. They stated that if you followed their meal plan, you could expect to spend between $14 - $16 a week on groceries. You're probably thinking, WOW! I'd love to pay $14/week for groceries! But what's the value of 1943's $14 in our current year of 2015?
Here's how you figure it out: Take the dollar amount in 1943, multiply by the average rate of inflation (that would be 3.22%)**, to the power of the difference in years (2015-1943) and you get your answer of the true cost in today's dollars. This is what the equation looks like:
$14 x 1.0322^(2015-1943) = $137.13
In other words, $14/week for groceries in 1943 in today's dollars is $137!
For the other end of their claim, let's do the equation again using $16.
$16 x 1.0322^(2015-1943) = $156.72
So, if we were to follow the Health-for-Victory meal plan today, we could expect to pay on average $137 - $157 a week. I think that's a pretty average price for today. (I'm judging by here in Maryland, which is a bit pricier than other states). So, not really that much cheaper.
Of course this doesn't take into consideration the cost of food itself and how it's changed over the years (especially meat!), but it gives us a good idea of how much they were spending a week on groceries based on the 2015 dollar value. If you want to figure out the true cost of 1943 food in today's money, just apply the price of the food with that same equation!
This is about as fancy as I get with math, folks, but math like this is fun when you can apply it in such a cool way to history!
We went to a huge WWII event this weekend which I'll post about soon. They had this neat little gas station set up. The lady working there said in 1944, gas cost 15 cents per gallon. Amazing! Only 15 cents??? Well, let's figure it out in terms of 2015 money.
Bust out the equation... (Notice how I change the year to 1944)
$0.15 x 1.0322^(2015-1944) = $1.423/ gallon!
They had a better deal on gas back then, that's for sure!
Speaking of which, gas was rationed, but not because they didn't have enough of it to go around! It's because rubber imports were controlled by Japan and were cut off. Without rubber for tires meant they needed to discourage people from driving by rationing their gas!
So, now we know that even though things appear to be dirt cheap "back in the day", we can't take those prices at face value. Do a little math and we can find out a more accurate picture in today's terms. I call that a pretty awesome application of history!
(You can do this calculation with wages as well. In case you want to go have some fun...) :-)
Were they really?
And this is where I rub my hands together and cackle with geeky glee. Just like we shouldn't judge our ancestors solely based on current standards and social norms, we shouldn't judge prices of yesteryear by today's dollar value.
I'll give you some examples.
(And don't worry. I'm not going to get super technical or get all crazy on the math, because Math is not my strongest subject. I'll fully admit I got my math-savvy husband to help me remember the equations I learned from my college economics class.)
Here's how you figure it out: Take the dollar amount in 1943, multiply by the average rate of inflation (that would be 3.22%)**, to the power of the difference in years (2015-1943) and you get your answer of the true cost in today's dollars. This is what the equation looks like:
$14 x 1.0322^(2015-1943) = $137.13
In other words, $14/week for groceries in 1943 in today's dollars is $137!
For the other end of their claim, let's do the equation again using $16.
$16 x 1.0322^(2015-1943) = $156.72
So, if we were to follow the Health-for-Victory meal plan today, we could expect to pay on average $137 - $157 a week. I think that's a pretty average price for today. (I'm judging by here in Maryland, which is a bit pricier than other states). So, not really that much cheaper.
Of course this doesn't take into consideration the cost of food itself and how it's changed over the years (especially meat!), but it gives us a good idea of how much they were spending a week on groceries based on the 2015 dollar value. If you want to figure out the true cost of 1943 food in today's money, just apply the price of the food with that same equation!
This is about as fancy as I get with math, folks, but math like this is fun when you can apply it in such a cool way to history!
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Another example is gasoline. Oooooh! Let's try it!
We went to a huge WWII event this weekend which I'll post about soon. They had this neat little gas station set up. The lady working there said in 1944, gas cost 15 cents per gallon. Amazing! Only 15 cents??? Well, let's figure it out in terms of 2015 money.
Bust out the equation... (Notice how I change the year to 1944)
$0.15 x 1.0322^(2015-1944) = $1.423/ gallon!
They had a better deal on gas back then, that's for sure!
Speaking of which, gas was rationed, but not because they didn't have enough of it to go around! It's because rubber imports were controlled by Japan and were cut off. Without rubber for tires meant they needed to discourage people from driving by rationing their gas!
So, now we know that even though things appear to be dirt cheap "back in the day", we can't take those prices at face value. Do a little math and we can find out a more accurate picture in today's terms. I call that a pretty awesome application of history!
(You can do this calculation with wages as well. In case you want to go have some fun...) :-)
**For the most up to date data on inflation, you can use this super handy online inflation calculator via Officialdata.org.