Recommendation: How To Measure Sums of Money From the Distant Past
Have you ever wondered what “10,000 a year” in a Jane Austen novel means in today’s money? Or have the same question while reading the Great Gatsby about Tom Buchanan’s wedding present to Daisy of “a string of pearls valued at $350,000?” Or thought about how to calibrate any sum of money in the distant past to today’s world?
This question came up for me yesterday as I was reading Edith Wharton’s The House of Mirth (after discovering that
reads it every year!)
Near the novel’s start, the main character Lily Bart loses $300 playing bridge. Lily’s at a week long September house party in the country. She’s poor compared to the other guests, but feels that part of the price of her being invited is to participate in the gambling.
The novel was published in 1905, and the action takes place in the 1890s. So, naturally, as a finance person, I want to know what $300 circa 1900 means, translated to today’s world. How serious of a financial blow is the $300 loss to Lily?
Here’s how to get the answer to these questions.
A great, free website called Measuring Worth.
https://www.measuringworth.com
It’s super simple to use. You put in the sum, say $300, the year in the past, say 1900, and the most recent year the site tracks, 2022.
Measuring Worth doesn't rely solely on the metric of inflation. It also calculates worth based on a bundle of consumer spending, unskilled labor wages, and a few other interesting metrics.
So, according to Measuring Worth, Lily’s $300 gambling loss is worth about $11,000 today using inflation, $30,000 using a bundle of consumer spending , and $55,000 in terms of wages for unskilled labor.
Using any of those metrics, we can see it’s a consequential financial blow to our poor Lily.
I've got to save this to read later but you hit on a really wonderful topic. One thing about comparing ancient incomes, labor was much cheaper, but things that we spend money on today like healthcare and electronics were flat out not available! That's real apples to oranges.
I looked this up once bc i was so tired of being confused. My rule of thumb is that 1000 pounds in 1820 was about 80k dollars, and in 1720 it was twice that. Though with our recent inflation that might be off!