4 points for a conversion, 2 for a try

Carol Baxter 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?

About these ads
This entry was posted in Economics Generally. Bookmark the permalink.

6 Responses to 4 points for a conversion, 2 for a try

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

  2. derrida derider says:

    Or Matthew Butlin’s

  3. Russell says:

    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.

  4. Claire says:

    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.

  5. TB says:

    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.

  6. ChrisPer says:

    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 ;-)

Comments are closed.