I don’t think it makes sense either with or without inflation. My first reaction that it was adjusted for inflation, since 40000 is probably below the family income of most people here. On the other hand, most people’s income is less than 40000 in 1913 dollars. On the gripping hand, the question doesn’t really make much sense if you don’t adjust for inflation. “Cars have gone up significantly in price, but are also more reliable.” If you don’t adjust for inflation, then while the question produces the author’s desired result when applied to 1913, it fails in other situations—for instance, with the price of a car today I could buy seven cars in 1963. Cars are not so much more reliable than 1963 cars to make up for such a difference, and in order to conclude the author’s point that cars are a better bargain now than in the past you have to take inflation into account.
At any rate, comic books, gasoline, and college educations are known cases where something went up in price faster than inflation.
I don’t read the original quote as an argument against the standard idea of inflation, but rather as a suggestion to additionally factor in changes in quality when discussing changes in price. It’s clear from looking at commodity prices that inflation has occurred; gas might be a bad example, but things like timber, steel, rice probably aren’t. But most consumer goods are not commodities in this sense, and 1913 or 1970 prices for them are not as directly comparable to those of modern goods.
In some cases the comparison seems to clearly favor either past or contemporary goods—I might prefer 1970 kitchen appliances or comic books, but I’d definitely prefer contemporary radios or TVs. In others it’s more of a wash—adjusted for inflation, a 2013 Ford Focus costs about twice as much as a 1970 Ford Maverick, but it’s got about twice the engine power and more interior room, and it’s far safer and more reliable.
(At a guess, incidentally, I’d say that $40000 was chosen because it’s close to the median household income in the US.)
I don’t think it makes sense either with or without inflation. My first reaction that it was adjusted for inflation, since 40000 is probably below the family income of most people here. On the other hand, most people’s income is less than 40000 in 1913 dollars. On the gripping hand, the question doesn’t really make much sense if you don’t adjust for inflation. “Cars have gone up significantly in price, but are also more reliable.” If you don’t adjust for inflation, then while the question produces the author’s desired result when applied to 1913, it fails in other situations—for instance, with the price of a car today I could buy seven cars in 1963. Cars are not so much more reliable than 1963 cars to make up for such a difference, and in order to conclude the author’s point that cars are a better bargain now than in the past you have to take inflation into account.
At any rate, comic books, gasoline, and college educations are known cases where something went up in price faster than inflation.
I don’t read the original quote as an argument against the standard idea of inflation, but rather as a suggestion to additionally factor in changes in quality when discussing changes in price. It’s clear from looking at commodity prices that inflation has occurred; gas might be a bad example, but things like timber, steel, rice probably aren’t. But most consumer goods are not commodities in this sense, and 1913 or 1970 prices for them are not as directly comparable to those of modern goods.
In some cases the comparison seems to clearly favor either past or contemporary goods—I might prefer 1970 kitchen appliances or comic books, but I’d definitely prefer contemporary radios or TVs. In others it’s more of a wash—adjusted for inflation, a 2013 Ford Focus costs about twice as much as a 1970 Ford Maverick, but it’s got about twice the engine power and more interior room, and it’s far safer and more reliable.
(At a guess, incidentally, I’d say that $40000 was chosen because it’s close to the median household income in the US.)