What do you measure money in?
Purchasing power is an important concept in macroeconomics. Defined loosely as how much goods a unit of currency can buy, it is a measure of the worth of money. The most careful analysis of purchasing power usually looks at the average price of a basket of essential goods. But there is a simplification. The price of Big Mac turns out to be a good indicator of the purchasing power; therefore the famous Big Mac index.
Also important in macroeconomics is the consumer's price index, which can reflect the living expenses in a region. It is again measured by the average price of many things. But I accidentally discovered a simpler way.
I was talking to Johannes the other day, who was complaining how expensive it was to live in Milan. Exactly how expensive? A pint of beer cost 10 Euros! "How much does a pint of beer cost in New York City?" Johannes wanted to know. That was how he assessed the living expenses in a city.
Of course, Johannes is German. So the living expense will be different for a French, an Italian, and a Chinese. We all have our own essentials in life, and we measure money accordingly.
Purchasing power is an important concept in macroeconomics. Defined loosely as how much goods a unit of currency can buy, it is a measure of the worth of money. The most careful analysis of purchasing power usually looks at the average price of a basket of essential goods. But there is a simplification. The price of Big Mac turns out to be a good indicator of the purchasing power; therefore the famous Big Mac index.
Also important in macroeconomics is the consumer's price index, which can reflect the living expenses in a region. It is again measured by the average price of many things. But I accidentally discovered a simpler way.
I was talking to Johannes the other day, who was complaining how expensive it was to live in Milan. Exactly how expensive? A pint of beer cost 10 Euros! "How much does a pint of beer cost in New York City?" Johannes wanted to know. That was how he assessed the living expenses in a city.
Of course, Johannes is German. So the living expense will be different for a French, an Italian, and a Chinese. We all have our own essentials in life, and we measure money accordingly.
A beer at Zeigeist, 4 bucks.
ReplyDeleteA six pack of Fat Tire at a neighborhood groceries store, 7 dollars.
A Martini at the Elbo room, 6 bucks.
A glass of Cosmoplitan at TopOfMark, 11 dollars.
Knowing that you really want to dress up and indulge yourself with an expensive drink, for a good company, for a fantastic view of the city or for the spur of the moment--but not for the vanity of a trivial mind--priceless.
Everyone holds something dear to his heart. What money can't buy is sifting through the haystack of collective social desires and uncovering your singular aspirations. Are the essentials truely indispensible? Are the dreams really ours?
The rise of bread price was associated with the popular discontent before the French Revolution. The increase of gas price, some people jokingly say, has something to do with the Iraq War. The money's worth certainly has its impact. But you sure you really need that SUV?
Beer, of course, is necessary, absolutely.