Sunday, December 23, 2007

Sunday dollars+sense: The true cost of those twelve days: $100,000

Got a spare $100,000? That’s how much it now costs to get your true love the complete gift set for Christmas – more than ever before.

On the list are turtledoves, calling birds, geese-a-laying, maids-a-milking… everything immortalised in the song The Twelve Days of Christmas.

Each year the US financial services firm PNC totals up the cost of the list and its findings not only tell us a lot about inflation, but also about the changing nature of the things we value.

This year’s total for the complete list (including the repetitions in the song) is $US78,100 – about $100,000 in Australian money...

Most years it has moved up in line with the general rate of US inflation – a finding that might seem odd. Piper’s piping, partridges and pear trees aren’t the sort of things that usually make their way into the consumer price index.

But it has been found time and time again that unless a shopping list is extremely obscure its total will usually move in line with prices in general.

The best example is the price of a Big Mac.

We think of a hamburger as one product, but actually it is its own shopping list containing within it labour, rent, electricity, farm produce and so on.

When, noting its standardised nature, the Economist magazine began (as a joke) comparing price movements in Big Macs across nations it discovered that they closely tracked more complicated measures of prices.

That’s because if ever one part of a big Mac was to became especially expensive people would buy fewer of them, their price would moderate and the prices of things people spent their money on would climb.

The other thing that PNC has discovered about the Twelve Days shopping list is that the importance of goods and services has changed places.

Goods (in this case birds and trees) used to account for most of the cost. Back two decades ago seven swans-a swimming cost $US7,000. Now it’s only $US4,000.

These days it’s the services that cost the money. The lords a leaping (sourced from the Pennsylvania Ballet) used to cost just $US1,680. Now they cost $US4,285.

Goods have become relatively cheap to source. We have become so much better at making them. But in Western countries we have paid ourselves more as well.

That’s why it’s the personal things - be they pipers piping, ladies dancing, or any service that requires face-to-face contact - that have become valued and rather more rare.