We once bought a VCR for about $250 that lasted five years. We had a CD player that lasted 12 years, in today's dollars it probably cost $550 or so.
So prices have fallen by at least half, but lifespans have fallen by about 3/4. The cost of ownership has risen significantly.
I wonder if that shows up in our inflation statistics, or do they just measure the cost of purchase?
Update 6/30/2013: Economists do write about this. I found this reference in notes from Baylor.edu in the context of price controls.
D. Countries that exercise price controls experience:I thought of this again when Emily tried to buy our children a 'slip and slide' water toy. It cost $5, it leaked, and Target won't accept returns (obviously, if they accepted returns they could not sell these toys).
1. Open, reported inflation - Occurs because not all prices are controlled or because planners increase prices.
2. Hidden inflation - Monetary price increases, but not measured.
a. Hidden transactions - black market or "under the table"
b. Hidden quality deterioration, false quality improvement, or forced substitution of high-quality for low-quality products
3. Repressed inflation - Occurs when price controls are effective, and inflationary pressure causes shortages or queues.
Searching Amazon, all of these devices had 2-3 star ratings due to leaks; there was nothing available at any price that was reliable. In Akerlof's words "Only lemons are on offer". On the other hand, we could buy 4 of the $5 toys and probably one would work. If our time cost nothing, and waste disposal were free, that would be the equivalent of a $20 toy (right price).
We don't have price controls, but we do have severe worldwide deflationary pressures -- probably related to global wealth concentration. They may be having the same effect as price controls, at least when it comes to quality.
- Gordon's Notes: Emergence, unanticipated consequences, and hidden inflation 5/2007
- Gordon's Notes: What if ours were a crisis of currency and quality? 3/2009. Pencil sharpener test.
- Gordon's Notes: Apple's battery charger, occult inflation, and the future of American industry 2010 rant. I think, overall, things are a bit better.
- Gordon's Notes: Why quality collapsed in the bubble years: Akerlof and the last good toaster 3/2012. How it can be that only lemons are available.