Over at Dr. Mark Perry’s blog, he consistently posts about the costs of things then and now. The latest is the cost of a scientific calculator (hat tip to Alex Kirtland who posted this on his facebook.). You and I have at least one scientific calculator (I have three, and one financial calculator), and it’s interesting to see the costs drop over the years. The scientific calculator went from geek tool to something every high school student must have.
Why is this of interest to me? A few reasons actually:
- An Esoteric Measure of Cost
If you noticed, Dr. Perry used time as a measure of cost. Esoteric measures excite us at Pressyo. We’ve talked a bit about valuing information, and among the more esoteric measures we came up with as an alternative to just price, included time and energy. While this is venturing into the land of Physics and not Economics any longer, it’s always good to keep an open mind (besides, the major theme here at Pressyo is that we use what’s best to achieve our goals, and that means having a plethora of knowledge would be handy).Costs factor in calculation of value of information, and in our discussions, we once talked about the virtues of various forms of valuation and value accounting, and naturally, time was one of the factors. Dr. Perry anchors time with wage (i.e. modern man only has to work 33 minutes to get a scientific calculator, as opposed to the neanderthals of th 70s, having to work for 12.5 hours).
Other valuation methods we considered included the fairly unheard-of Energy Accounting technique and similar. We’ll discuss it another day, as it would only serve to kick this blog post out of topic.
- A Different Way of Handling Inflation
If you took the time to discount $58.95 from 1975 to present, you’d notice that $58.95 in 1975 is worth about $238.83 (this is when a financial calculator is handy, by the way, when you want to do NPVs like these). In his article, you’d notice Dr. Perry mentions that it’s worth $230 in today’s dollars.Now, I take it most people do not understand what I just wrote in the above 2 lines. It’s rather simple, actually. By expressing inflation in terms of time and wages, as 2 separate variables, it makes things easier to understand, than saying stuff like “discounting to the present”. It gives one a base level for comparison.The beauty of this is, one doesn’t even need to know how to discount to take into account for inflation. This is because wage itself is already affected by inflation, and hence all that is affecting the change is time. This excites me because its very very hard to explain inflation to people who ask. Dr. Perry essentially gave me a new way of explaining it.
At Pressyo we deal with growth and inflation everyday, and though Dr. Perry’s post is restating the obvious (rephrasing is the word to use), it remains refreshing to see something old explained in a new way.
- Technology Matters
I think this is what Dr. Perry was driving at in his series of posts – that technology matters. Technology drives down costs. Indeed, most of his blog seems to be dedicated to growth. Technology has allowed people to do more for less.Pressyo, as you may know, is technology driven (mostly the same technology that drives NYSE and stock exchanges), and we would very much like to bring more luxury to humans.
The luxury we have today – would you trade it off for so-called “better times” of the past?
Finally, really? $9.99 for a scientific calculator? I feel ripped off.
Tags: cost, technology, value