Sugar at $432 a pound?
Since 1850, human innovation has reduced the time price of sugar by 99.65 percent, which means sugar abundance has increased by 28,700 percent.
You can buy a pound of sugar at Walmart today for $1.50. In 1850, that price would have been 288 times as much, or closer to $432.
We often talk about inflation and how much higher prices are today and try to make adjustments from nominal prices to real prices. But as Nobel prize-winning economist and Yale professor William Nordhaus has noted, this may not capture reality. 1 A much better approach is to consider time prices. Time prices are the hours and minutes it takes to earn the money to buy something. Money prices are expressed in dollars and cents and time prices are expressed in hours and minutes.
In 1850 wholesale sugar was selling for 17 cents a pound in the United States. Given that a factory worker earned six cents an hour 2, he had to work two hours and 50 minutes to earn enough money to buy one pound of the sweet substance.
Today it’s selling for about 32 cents a pound. The hourly compensation rate of a U.S. factory worker, in the meantime, rose to $32.54. So, a pound of sugar now “costs” 35 seconds of work.
Put differently, the two hours and 50 minutes of work required to buy one pound of sugar in 1850 gets a factory worker 288 pounds of sugar today. Since 1850, life has gotten 28,700 percent sweeter.
Thank you to all of our fellow human innovators that make life so sweet.
Excerpt from our forthcoming book, The Age of Superabundance.
https://cowles.yale.edu/sites/default/files/files/pub/d10/d1078.pdf
https://www.measuringworth.com/datasets/uswage/