Friday, May 15, 2009

Would You Mail Fries with that?

The recent hike in US postage fees has led to lighthearted discussion of the suitability of Forever Stamps for speculation. The relative difficulty of liquidating vast amounts of Forever Stamps, combined with the legal requirement that the Post Office not raise rates faster than inflation, suggests no.

However it's still fun to ask whether or not this rate hike is justified; is postage historically cheap or expensive? Wikipedia claims that postage prices relative to the consumer price index have changed very little in past three decades. However the consumer price index fails to take things into account that feel like inflation (or deflation) to me personally like the purchase price of a home (it uses rents instead, because "owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items" ... gee I wonder how asset bubbles ever form).

Clearly then we must find some other barometer to judge the cost of postage, and in the spirit of the Big Mac Index I nominate the Big Mac. Note this is actually a bit stupid because the Big Mac Index is designed to assess the same item being sold in different places at the same time; over time its price relative to other stuff should move around, e.g., due to beef prices. However the temptation was just too delicious to pass up. Armed with historical data gleaned from the archives (hey, the print subscription finally had digital utility!), I assembled the price history of a Big Mac over the last decade. Without further ado, here is the number of stamps it would take to buy a Big Mac varying over the past 10 years.As you can see, postage is currently relatively cheap even after the recent price hike, since it takes circa 8 stamps to buy a Big Mac.

No comments:

Post a Comment