# Another one bites the dust

The Thomas the Tank Engine kids have hit Puberity, Another 15 years and they will hit the hobby full force.
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Wolf Kirchmeir wrote:

I tried several online inflation calculators to determine the increase in price due to inflation, etc. Using \$2.49 in 1956 American dollars gave these results:
\$19.07 from http://data.bls.gov/cgi-bin/cpicalc.pl
\$18.11 in 2006 dollars from http://www.westegg.com/inflation/infl.cgi
\$18.72 from http://www.halfhill.com/inflation.html
\$17.29 in 2004 dollars from http://cost.jsc.nasa.gov/inflateCPI.html
The calculator at http://www.inflationdata.com/inflation/Inflation_Rate/InflationCalculator.asp works a bit differently. You enter the starting and ending month and year and it tells you how much inflation has occurred. I used Jan. 1956 to July 2007 and got 677.24% Multiplying the original \$2.49 by this gives \$16.86 in modern dollars.
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Rick Jones
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Rick Jones wrote:

Thanks for this - should've looked up several sources myself. I can't recall where I got the inflation factor of 15 from ca. 1950 to present, but it was online, too. So much for online reliability. ;-)
One of the problems with the inflation calculators that use gov't numbers is that the "basket of goods" used for calculating the CPI has changed several times.
Personally, I prefer to compare how long it took me to earn the money for a kit back then vs how long it took me when i retired. The difference is astounding. In 1956, I made 1.5 times minimum wage. When I retired, I was earning about 6 times the minimum wage. (NB that in Canada the minimum wages have not kept up with inflation, but they haven;t fallen as far behind as in the US - and in the US many states have no minimum wages.) So in terms of my earning power, nmodel trains have dropped hugely in cost. The same is I suspect true for most people over the last 50 or so years.
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Wolf Kirchmeir wrote:

The perception of increasing prices must surely be increased by Athearn prices having remained fairly constant for thirty years and the likes of Bachmann increasing quality along with prices?
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If wages went up at a rate FASTER than inflation, wouldn't that effectively make the price of that kit less today than it was fifty years ago?
For the typical modeler... if that exists.
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Personally I think the problem is that there are a host of clubs out there that are basically marketting the hobby to the public. The problem is that a lot of these clubs are more interested in running the club instead of running the trains. I love modular railroading but I am not really interested in what it takes to move a module from one location to another.
Just my 2 cents.
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Inflation x15???, wages x20???
If wages went up at a rate FASTER than inflation, wouldn't that effectively make the price of that kit less today than it was fifty years ago?
____ Mark
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Mark Mathu wrote:

Well, Mark, your ???? imply a plea for insight, so here's how I understand inflation. But you might want to google "cost of living" for sources of the numbers. There are several.
Cost of living numbers come from various more or less official agencies. The historical ones estimate inflation rates from the middle ages onwards use factors such as the price of wheat, a day labourer's wage, etc.
Official (govt) CoL numbers are problematic, however, since the the "basket of goods" has been revised several times since the 1950s, in Canada at least twice that I know of. That's necessary because technology changes what's necessary and/or available: the fuel price component for example doesn't include the price of coal anymore, because people heat their homes with gas or oil, not coal. The price of gasoline is weighted higher because the average Canadian drives further now than then (and has to, since we prefer to live in the suburbs.)
Also, the base on which to calculate CoL increases is adjusted every few years to prevent really large numbers for current CoL. IMO, what's more significant than CoL is the CoL/wage ratio: the percentage of average income that was/is needed to buy the current basket of goods. (BTW, the "poverty threshold" is the income for which that ratio is 100%.)
To calculate an old price in today's money, multiply by the inflation factor. To calculate today's price in old money, divide by the inflation factor.
Wage inflation is a better guide to real cost IMO, because price is a proportion of my wages. That is, \$1 of income now is equivalent to 5 cents in the mid-fifties. That's what counts: my budget is estimated in terms of my income, not cost of living. For a low income earner even a mild rise in cost of living will be difficult to manage. For a high income earner, even a large rise in cost of living will be barely noticeable. So wage inflation seems to me a better guide to real prices - it measures the hit your wallet takes. To calculate the price of that \$2.49 kit in terms of your wallet, multiply \$2.49 by 20. Any _current_ price that's less than that for a _comparable_ product shows that the real price of that product has come down, as you infer in your comment. But it was higher back then, which is my point.
The fact that wages have inflated about 20x while CoL has inflated 15x means that on average we have more "disposable income" than we did 50 years ago. Disposable income is what's left after the necessities (as measured by CoL) are taken care of. IOW, we now have more money for toys, like model railroads. But being the ornery 'uman cusses we are, the more spare change we have to spend, the more we whinge about prices. Go figure.
I haven't seen any attempts to measure the inflation of prices for amenities, toys, and luxuries, but it's worth noting that a flat-screen plasma TV costs about the same in mid-50s dollars as a b/w TV cost then. If you know a grad student in economics, you could suggest such a study as Ph. D. project.
HTH
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(snip)
I recommend you try this site and be done with it:
http://www.aier.org/research/col.php
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Mark Mathu wrote:

There are a number of inflation calculators on the Net so I ran the numbers through a few of them. The calculator here: http://www.westegg.com/inflation/infl.cgi gives this result: 1955 - \$2.49 2006 - \$18.04
The calculator here: http://www.bls.gov/cpi / gives this result: 1955 - \$2.49 2007 - \$19.53
The calculator here: http://minneapolisfed.org/research/data/us/calc / gives this results: 1955 - \$2.49 2007 - \$1938
The calculator here: http://cost.jsc.nasa.gov/inflateCPI.html gives this results: 1955 - \$2.49 2004 - \$17.55
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Rick Jones
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The world's population is now in excess of 6.5 billion.
This means that even if you happen to be a one-in-a-million kind of a guy, there are still 6,500 other guys out there *exactly* like you.
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P. Roehling wrote:

Genetically, you're one in some unimaginable huge number. 1 in , where X is the number of variations possible in each chromosome that your Daddy and Mommy each contributed to making you. In fact, the odds are you don't exist at all. ;-)
HTH
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I knew you were going to say that.
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Rick Jones wrote:

OK, I'll accept the figures as given above, though I have questions about them (see below). The figures don't refute my point, they just make it less spectacular. I can live with that. ;-) My point was and is that we get more model railroading product and higher quality for our dollars now than we did 50 some years ago. This is especially true when you translate those dollars in time spent earning them.
You needn't read the rest of this unless you want to puzzle about cost of living, inflation, and how they are calculated. ;-)
Now for my puzzlement about the inflation figures used on those sites When I investigated the issue about a year and a half ago, the factor 15 for prices and 20 for wages stuck in my memory. I seem to recall it was a calculation prepared by The Economist. Have to check that out, I guess. Not that the actual numbers matter. What matters is what's meant by "cost of living", for that determines how it's calculated.
I checked the numbers on Aier Research, which are nearly identical to the ones you come up with. The factor of about 7.5 for both wages and prices doesn't seem right at all. They don't seem to match or illuminate the typical experience of the typical earner in Canada (and the USA). Has the US Bureau of Statistics changed the way it calculates cost of living? If so, when, how, and why? Or does it use a different base than whatever source I used that impressed me with the numbers I cited?
Anecdotally:
Re: wages: In 1957/58, when I worked for Chemcell in Edmonton, Alberta, industrial wages in that city ranged from about \$1.50/hour to about \$2.50/hour. Nowadays, industrial wages in Alberta range from about \$25 to about \$40 an hour, which gives a factor of 17 or more. Minimum wage was 69 cents/hour, now its about \$6 an hour, for a factor of 8.7. A teacher's maximum wage was about \$3,000 per school year, now it's about \$60,000 per school year, for a factor of 20.
Re: prices: A cup of coffee cost 5 cents (it went up to to 10 cents sometime after 1960 IIRC). Now a cup of coffee costs \$1 or more, giving a factor of 20 or more. A loaf of bread cost 19 cents. It now costs \$2 more or less, for a factor of 10. A pair of dress shoes cost \$40, now it costs about \$120, for a factor of 3. A 21" b/w TV cost about \$300, now a 21" colour TV costs about \$150, for a factor of 1/2. A computer equivalent in power to a modern desktop computer cost about \$1,000,000; the desktop computer costs less than \$1,000, for a factor of 1/1,000 or less.
So it all depends on the way cost of living is calculated. I seem to recall that the factors of 15 was based on the cost of necessities, ie, minimal food, shelter, clothing, and energy. If the basket of goods used by the USA Bureau of Statistics includes amenities such an entertainment, private owned automobiles, etc, that will certainly bring the cost of living inflation factor down.
But that's enough on this topic in this forum, I think.
I'm going to assemble or finish assembling at least two kits this weekend. I promise! Scout's Honour! Really! Cross my heart! Spit and shake on it!
;-)
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Wolf K. wrote:

I vaguely seem to recall that such is the case. Some items that were included in the calculation decades ago are not included today. I do not know specifically what sort of things, but my (faulty) memory seems to be thinking of gasoline as one of the items, or perhaps heating oil/gas. I think the government may have dropped certain items such as these from the calculation in an attempt to gloss over how bad things were really getting a couple of decades ago.
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Rick Jones
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I remember a big write-up on the items some years ago. One thing I remember was a piano. Everyone said WHAT! Other items as dumb are included. This is so it's far better than what you think it is <VBG>!
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Being 25, I think I can provide useful insight on this, since I am to a large degree guilty of this myself.
Computer games cost \$25-50 and last no matter how long I want to play, if they aren't just released under a license like the GPL that acknowledges that software is by definition without scarcity. I don't have to pay another \$25-50 because I want to play a new level or throw in addons. User created content is immediately available without scarcity (and thus, without price).
Heck, I live in an apartment. The closest I get to having a model railroad is Auran Trainz, and that gives me enough scenery, space and rolling stock to put damn near any club's layout to shame, only difference being it's tangability.

\$0. I pay a cable bill and have a TiVo for a reason. Just takes longer for a release. I have a hard time justifying spending extra money to watch the same crap in a less comfortable environment where I don't have a volume knob, especially given sound editors have seemingly forgotten about normalization and sound quality, instead figuring louder and more distorted is better.
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J. Murray wrote:

Keep that in mind the next time you see the price of an R-T-R car. And you didn't include decals in the costs.
If the bottom line for a model railroader is operating a layout and not just building models, RTRs really aren't that far off the scale. This hobby is big enough to encompass everyone's interests.
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I've been wondering about this very subject for quite sometime now. I'm 77 and, like a lot of us, have been interested in modelrailroading most of my life. I wonder if some of this was'nt brought about by the sight and sounds of that monsterous engine huffing. puffing, and clanking, pulling that never ending various line of cars roaring down the track. Young generations haven't had to stop at many railroad crossings and wittness that kind of live excitment, and therefor can't relate to it. The only thing compearable is maybe a spacecraft launch and that's on TV! I keep hoping the model manufactures will recognize this, and lower their prices, but unforunately the opposite seems to be happening, ha!
jim shields
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On 8/24/2007 8:23 AM snipped-for-privacy@webtv.net spake thus:

Well, according to what you wrote, even manufacturers lowering their prices would have little or no effect, since the problem you stated (at least part of the problem in my view) is that youngsters aren't directly exposed to the excitement of trains blasting by any more. They could give the stuff away and kids would still turn their noses up at it in favor of Playstations, Wiis, Xboxes, etc.