When family members were cleaning out my Great Aunt's house, they found this receipt for a radio-phonograph (with an LP player, which was brand new at the time). Using the tools developed in Chapter 16, I found that $223 in 1953 would equate to $1,960 in 2015. A modern system with speakers, AM/FM radio, CD, and an input for your iThing will run around $500 for one of good quality and $75 for something more like a boombox.
Question:
Think of a product or service that you currently enjoy. You should pick something simpler than my example, where there were too many price/quality variations. The title example (a movie ticket) is more comparable across time (but you can't pick that one).
(1) Ask an elder (parent, grandparent, aunt, etc) about the cost of that item when they were your age. (They can approximate, although they also need to give you a particular year.)
(2) Did the same product even exist? What is the closest substitute (as I had to, with the CD instead of a phonograph and an iThing input instead of an LP player)?
(3) Use the CPI calculator (at www.bls.gov/data/inflation_calculator.htm) to calculate the price in current dollars. Was the item more expensive or less expensive when your elder was your age?
Respond to one of your fellow student's examples. In your response, state the biases that might make their comparison seem off.
For example, in the case of a movie ticket. . .
(1) There is substitution bias: Many people have improved âhome theater systemsâ these days, whereas home entertainment back then meant card or board games. As the cost of movie tickets has risen, people have invested more money in home theater systems, instead of going out to the movies.
(2) There is also quality bias: Movie theaters have better sound and better film quality (even 3D) than what was available years ago. They even have cushier chairs that lean back farther.
