Virginia Postrel expresses her amazement (although given her politics, I suspect she is not actually amazed but more simply just impressed) that she can buy five pounds of flour for 69 cents. Brad DeLong follows up by observing that the average American can buy 450 times as much flour for the wages of an hours work than could the average medieval peasant of 1500, and by that measure people today are 450 times richer than in 1500.

I think in actual fact the situation is even better than Brad and Virginia have said. Yes, we are 450 times richer in terms of the amount of food staples we can buy.

However, consider someone who was 450 times as rich as the average person 500 years ago. That person could spend a small fraction of his income on food, and then the rest of his income on other things. However the selection of other things that could be bought was not all that great.

Now consider the average person in America today. He can spend a similar proportion of his income on food as the rich person of 500 years ago. He could then spend the rest of his income on other things. The choice of things to spend the money on today is enormous: vastly greater than what could be purchased in 1500. Cars, DVD players, computers, a much greater selection of foods, and a great many things that would have appeared to be magical in 1500. In purely material terms, the average person today is much better off than a very rich person of 500 years ago, due to the greater choice of products that can be bought. In this instance, greater choice means greater wealth. I think that greater choice indicates at least as great an increase in wealth as the dramatically lower prices (in terms of income) pointed out by Brad and Virginia.

I was talking about similar things when I wrote this article about Ikea a week or two back.

Also slightly related to this is an article (abstract only available online, sadly) by William Nordhaus of Yale, on the "price of light", that is the cost of artificial illumination. He was mainly demonstrating how measures of inflation fail badly (and therefore that statistics understate economic growth badly) over long periods of time.

Traditional measures of the cost of light do not take into account the fact that the quality of the devices we use for illumination (oil lamps, gas light, electric bulbs) have improved dramatically over time (getting brighter for instance). Uf you measure the actual cost per lumen-hour Nordhaus concluded that the cost of light dropped by a factor of 400 between 1800 and 1992. (This is in inflation adjusted terms, I think. I don't actually have the paper handy, so I cannot check that. In terms of the increase in the amount of light that can be purchased with the fruits of an hour's work, the result will be even more impressive).

Of course, our response to this drop in cost is to buy a lot more light (which is not the case so much with wheat) but this is another remarkable statistic.

(Further googling finds me extensive comments on this paper by Brad Delong, which leads me to conclude that Brad is familiar with it)