Carol BaxterÂ comments:

I am trying to work out the value today of 14000 pounds in 1828 which was the haul from a robbery in Sydney. It is for a book that is soon to be published so I need an accurate estimate, or as close as I can get.

The two natural ways I can think of converting this would be to index it by inflation or to express it as a share of GDP. But I can’t find a long-run series of CPI or nominal GDP (Angus Maddison’s tables are all real GDP). Can anyone point Carol in the right direction?

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Graeme Snooks’ work on Australia’s early economic history is probably a good place to start.

Or Matthew Butlin’s

A question from the totally economically illiterate …. what does value mean here exactly. I see that you could do the CPI thing and end up with a dollar figure. But would that necessarily reflect the changes in what that money could buy – over such a long time? Perhaps another perspective would be to find out what sort of house or land it could buy (14,000 pounds in 1828 – a very large house!) . How much did a suit of clothes cost? A carriage? So that you had some sort of comparison with what those things cost/are valued at today. It might be a more meaningful measure to a reader.

What Russell says is what’s normally done in history where the point is to give a point of comparison for the reader. They usually use basic foodstuffs for pre-industrial revolution prices – bread, in particular.

It may be worth giving the RBA or Treasury a call. There’s a good chance they’ll have some CPI data going back that far.

The value of money is pretty near impossible to index meaningfully, because what we get for a weeks’ average salary is so very different.

Indexing on ‘cost of living’ does not allow that we now regard vacuum cleaners and top-class health care as basic necessities, which were just not economically available in that time.

My suggestion is based on Burgernomics – look for some vaguely equivalent product in the two cultures or times and index to that. I suggest a modern third-world teacher’s salary might have living standard equivalence to an Australian teacher in 1848.

1) Divide the 14000 quid by a teacher’s salary in 1828, which is an occupation that has some vague equivalence over the time. The result is a certain number of ‘teacher man-years at modern third-world living conditions’.

2) Find out the teachers salary in say Sri Lanka, and convert to Australian dollars.

3) Multiply the man-years figure by the modern third-world salary.

OR just use Australian teachers salary, they might say there isn’t much difference ;-)