How to calculate an old object in today's dollars? (1 Viewer)

[Karl_O]

Is there a way to calculate something decades ago in today's dollars? For example, a certain item costs a hundred dollars in 1900. How can I know the cost of that item in 2003 dollars? Is there a formula to find out, or does it requires guesswork?

 

[Scott Dautel]

Thats basically what the US Consumer Price Index (CPI) is all about. Here's 50 years worth of data
Since every year is expressed as a percent over the preceeding year I would say you have to multiply them together.
Example: $100 in 1990 dollars is:
100*1.031*1.029*1.027*1.027*1.025*1.033*1.017*1.01 6*1.027*1.0315
= $129.68 in 2000 dollars.

 

[Glenn Overholt]

I was ok with your answer until I saw your total. I hesitated answering yesterday because there are so many factors.

First, take a house. I think Sears had them for mail-order for about $150. (Can someone multiply that factor out)?

Second, I am not sure, but I think that cars were slightly overpriced the first few yerars they were out. Just like DVD recorders are overpriced now.

I think the CPI used everyday items, but I don't know what. I think bread couldn't have been more than 5 cents a hundred years ago, so that would be something to consider too.

All in all, it would just take smarts and a little guesswork. So, what is the item in question?

Glenn

 

[Danny R]

Scott's answer is pretty much right on. However you have to remember that it pretty much is an indicator of the economy as a whole. Individual products can't be computed based solely on CPI data, as other factors affect each industry separately. CPI data prior to 1913 is very sketchy in any case.
A table of the CPI from 1913 to 2001 can be found here in Excel Format. Use simple ratio math to computer how prices change over time.
According to this source, a single family house in 1900 was about $5000 and averaged 700-1200 square feet. However I see here what you mean about mail order homes. Based solely on CPI data (starting with the same price in 1913), you'd have something around $90,000 today, which is pretty close to home prices in many areas of the country.

 

[Todd Hochard]

Scott only calculated 10 years, from 1990 to 2000.
Did you know that first class passage on the Titanic was $4700? Calculate THAT in today's dollars, then decide if it was worth it! (Never mind the outcome, wise guys )
Ford's Model T was well under $1000 when it came out. http://www.hfmgv.org/exhibits/showroom/1908/lit.html
Todd

 

[Glenn Overholt]

Ok Todd, but how many weeks wages did $1000 come to? That's the missing info.

Glenn

 

[Ashley Seymour]

One suggestion is to go back and figure how much a worker could purchase with an hour of his wages.

Things like bread, milk, butter, eggs, meat, corn are pretty much the same today as 100 years ago. What has changed is that productivity has gone up and each item costs less now per a unit of labor.

Comparing houses and cars is a bit harder. That $150 house or $5,000 house is not the same as a new home today. Homes today on average are bigger, but you could find a 1,200 sq ft home and compare it to a 1900 era 1,200 sq ft home. Think what costs more now or is a big technical improvement. Today - better windows, insulation, construction techniques, garages, kitchens, indoor plumbing, electricity.

Go a little later into the 1900's and the Model-T is like nothing we have today.

Maybe the best example is to go into a neighborhood with a 1900 era home and see what it is worth today - subtracting out any improvements over the 1900 era home.

I was browsing a copy of the LIFE magazine that covered the Kennedy assination. In an ad for GE tv's a BW 16" portable, manual tune, limited chanels, was $139.00 Also, what looks like a 17" portable for $449.95.

In absolute dollars, tv's are cheaper today than 39 years ago! In inflation dollars, the above tv's probably cost $35 to $125 but with many more modern features.

We pay more for things today because the dollar is inflated, but also because we are getting more in the same product.