How to get an accurate comparison of monetary value between a historic date and today.

Where I am giving a historic figure, and a modern-day equivalent. For example, the first price of a modest villa in 1854. The house containing on the ground floor a front and back parlour, hall and kitchen, and on the upper storey a landing and three bedrooms. The cost of erection was estimated, ” in the near neighbourhood of London, at £160.” [ a modern day equivalent of £115,000] The figures are calculated using the following comparators, and the one I have chosen to use is the “economic status” figure. This is the reason why.

It’s always a struggle to make any sort of comparison between historic monetary values, and those of today. One of the standard, and I think slightly lazy, versions is to apply a change to RPI; which I think is fairly inaccurate. The Bank of England has an inflation calculator which says “Our inflation calculator shows how the cost of goods and services changes over time. You can check the effect of price changes over any period from 1209 to 2016.”   There is an American, Australian, British academic site called “MeasuringWorth” which provides a wider, and, I think, better, range of comparators. They say ” MeasuringWorth has two missions. The first is to make available to the public the highest quality and most reliable historical data on important economic aggregates. The second is to provide carefully designed comparators that explain the many issues involved in making value comparison over time.We do this as a public service. We are not incorporated nor directly connected to any institution. We never run ads. We do not receive any government funds.”

Donate to MeasuringWorth here, if you like.

I find their figures probably more accurate, and using their definitions, I use  “Economic Status” as the direct comparator. So, for example;  £6,000 in 1870 would be £4,480,000 using the economic status calculator. But according to the Bank of England calculator, it would be £669,483.87. This is the reason why, in the words of MeasuringWorth:

“Economic Status measures the relative “prestige value” of an amount of income or wealth measured using per-capita GDP. When compared to other incomes or wealth, it shows the relative prestige of the owners of this income or wealth because of their rank in the income distribution.

Economic Power measures an amount of income or wealth relative to the total output of the economy. When compared to other incomes or wealth, it shows the relative “influence” of the owner of this income or wealth has in controlling the composition or total-amount of production in the economy. This measure uses the share of GDP.

The average earnings of an accountant were $2,250 and in terms of what goods and services an accountant could buy in 1931, he (there were few women accountants) received a historic comparative purchasing power of $31,700 in current dollars (using the CPI index).

His contemporary standard of living was over twice that amount, or $70,700. This is about 40 percent more than the average household bundle today, showing a high buying power.

Finally, with his $2,250 salary, the accountant enjoyed an economic status of close to $170,000 in current terms and an economic power of close to $420,000. The interpretation is that his wage enabled him to go to the same country club as someone today earning $170,000 and that he would be perceived to have the same economic influence as someone with a current annual income of a almost half a million dollars.”

So using Jane Austen, to give some examples from 1813.

Pride and Prejudice comparison

Pounds in 1813

Bank of England Inflation Calculator

Economic Status

Economic Power

Mr. Darcy’s income per year

£10,000

£‎ 636,000

£ 8.3m

£ 39.7m

Mr. Bingley’s income per year

£5,000

£‎ 318,000

£4.15m

£ 19.8m

Georgina Darcy’s inheritance

£30,000

£ 1.9m

£ 24.9m

£ 119m

Mr Wickham’s inheritance from Mr. Darcy

£1,000

£‎ 63,500

£830,000

£ 3.9m

Mr. Bennet’s income per year

£2,000

£‎ 127,000

£ 1.6m

£ 7.9m

Annual cost of the. Bennet girls

£500

£‎ 32,000

£415,000

£ 1.9m

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