Wikipedia:Reference desk/Archives/Humanities/2022 January 15

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January 15

Adjusting for both a different currency and inflation

When I see the price of something from a different year or country, I like to convert it to get a better idea of how much that price would mean to me. "¥4000? Oh, that's like $35. $40 in 1965? Oh, that's like $330 today." Simple enough when you're dealing with one of those two situations, but what about both? I'm looking at some prices listed in Japanese yen, published in 1972. How would I convert them to the equivalent of 2022's US dollars? Would I use a Japanese inflation table and today's exchange rate? Would I use 1972's exchange rate, then adjust for inflation? Both methods give me different results, both seeming outrageously high (though I guess that was simply the cost of translated, imported books in the early 70s).--The Ninth Bright Shiner 12:41, 15 January 2022 (UTC)

Both methods could give a somewhat valid result (within limitations), depending on what you want -- to adjust for Japanese inflation from 1972 to 2021, or to adjust for U.S. inflation from 1972 to 2021. (There's no reason why the two inflation numbers would be the same.) AnonMoos (talk) 17:39, 15 January 2022 (UTC)

I guess it depends a bit on what you're trying to understand from the price. If I wanted to compare the price from the perspective of US pricing, I would first convert to USA dollars using the 1972 exchange, then use US inflation rates. That would answer a question like "how expensive would it have been to buy this book in USD?" But I think what you're after is what the price would "feel like" to someone in Japan at the time? In which case I would say what you actually want to do is compare the price in JPY to another JPY benchmark that has inherent meaning, rather than messing about with inflation at all. For example: what was the average weekly/monthly/yearly worker salary in Japan, or a particular Japanese city, in 1972? Or the median income, or some other similar kind of measure. Rent can be another good one to compare, though the "expected middle-class standard" for what you expect to be able to rent is quite different in the USA and Japan. -- asilvering (talk) 23:11, 15 January 2022 (UTC)

I cannot say when or why one of the two approaches is better, but calculating both ways will give you a range, which may come out narrow enough for your purpose. A potential cause for discrepancies is the difference in the composition of the baskets of goods and services used by the countries' statistical bureaus to express the inflation as a single number. For example, rice is a much more important commodity in Japan than in the US, so it may account for a larger fraction of the Japanese basket. Consequently, then, rising rice prices have an accordingly stronger effect on the Japanese inflation number. Another cause may be differences in price policies. Gasoline prices are kept artificially low and steady in the US. That depresses the US inflation rate. Imposed trade tariffs and non-tariff barriers may also play a role.  --Lambiam 23:13, 15 January 2022 (UTC)

Asilvering is on target. Another option is to look at the share of household income that Item X represents, and use that to compare to either Japanese households today, or share of US household spending back in the day. The major issue is that there has been a huge shift in what people spend their money on, over time. DOR (HK) (talk) 01:41, 16 January 2022 (UTC)

Is the FIA president still unpaid?

I'm pretty sure that it was once the case that the president of the FIA receives no compensation. Was that true and is that true?

(If [still?] true I don't think it would be inspire charity. I think it would be to ensure that only rich establishment types are selected.) Hayttom (talk) 16:35, 15 January 2022 (UTC)