It's only money!!!!

[Jamboesque]

Hi folks.

I’m trying to estimate the value, in today’s terms, of a branch of my families Wills & Testaments (they were Jolly’s, tenant farmers and the like from Kincardineshire) and I found a website called Measuring Worth http://www.measuringworth.com/ukcompare/ which allows for an amount to be entered with a source year and the relative value displayed for a given year.

The problem I have is that there is a choice of 5 solutions (RPI, GDP deflator, Average Earnings, Per Capita GDP and GDP) so that, for say I wanted to find out the value in today’s terms of £500 in 1850, the results would be £38 276, £52 964, £345 036, £489 438 and £1 070 863. The website does have descriptions of what each algorithm means, but I’m an engineer to trade and not an accountant/economist.

Has anyone else used this site and if so which valuation is the best one to use in terms of Wills & Testaments. It would be nice to know if my relatives were doing OK, reasonably wealthy, rich or fabulously well-off, I know it’s probably not the later because if that’s the case it’s not filtered down to me!!!!!!

Thanks

Jack

[DavidWW]

Hi folks.

I’m trying to estimate the value, in today’s terms, of a branch of my families Wills & Testaments (they were Jolly’s, tenant farmers and the like from Kincardineshire) and I found a website called Measuring Worth http://www.measuringworth.com/ukcompare/ which allows for an amount to be entered with a source year and the relative value displayed for a given year.

The problem I have is that there is a choice of 5 solutions (RPI, GDP deflator, Average Earnings, Per Capita GDP and GDP) so that, for say I wanted to find out the value in today’s terms of £500 in 1850, the results would be £38 276, £52 964, £345 036, £489 438 and £1 070 863. The website does have descriptions of what each algorithm means, but I’m an engineer to trade and not an accountant/economist.

Has anyone else used this site and if so which valuation is the best one to use in terms of Wills & Testaments. It would be nice to know if my relatives were doing OK, reasonably wealthy, rich or fabulously well-off, I know it’s probably not the later because if that’s the case it’s not filtered down to me!!!!!!

Thanks

Jack

The very basic and problematic question in this context, on which there is much continuing debate in relevant academic circles, is just what should be taken as the relevant comparator(s) ??...........

In other words, the price of "what" should be used in terms of subsequent variations up until the present day............... hence your very perceptive listing of the possibilities of RPI, GDP deflator, Average Earnings, Per Capita GDP and GDP, and many more such indicators, including the prices of various everyday commodities.......

David B.Sc., C.Eng., F.I.Chem.E. !!

[joette]

For me personally I used the Purchasing Power! It shows how much you would have to spend today at the money level of the years you searched.
Made sense to me to see what their money would buy me today!

[Maisie]

Hi Jack

Of the ones quoted I'd go for average earnings. In December last year average (male, of course) fulltime earnings were about £31,000. So, if my shaky logic stands up you should be able to get a feel for how much your ancestors left by comparing the figure you get with £31k. Eg if the figure is £300k then they left 10 times average earnings in 1850.

Maisie

[DavidWW]

For me personally I used the Purchasing Power! It shows how much you would have to spend today at the money level of the years you searched.
Made sense to me to see what their money would buy me today!

But purchasing power in terms of what purchases?, - bread, beer, whisky, coal, rent, etc., etc., - as the inflation/deflation in the prices of various commodities differ greatly over the centuries (Even using a "basket" of purchases leads to distortion...)

David

[DavidWW]

Hi Jack

Of the ones quoted I'd go for average earnings. In December last year average (male, of course) fulltime earnings were about £31,000. So, if my shaky logic stands up you should be able to get a feel for how much your ancestors left by comparing the figure you get with £31k. Eg if the figure is £300k then they left 10 times avarage earnings in 1850.

Maisie

And there's a problem there as well with the use of earnings as a comparator over the centuries due to various factors that lead to distortion, but it's probably one of the better.

Quite seriously, this is an area that drives economists nuts

Take wkisky, for example, - now why would I do that , - OK, let's make it spirituous liquors in general then.

In the last couple of decades, their price in real terms has plummetted, both in terms of the comparison with the RPI, but also in terms of one of the better comparators, possibly the best, which is the number of hours or minutes of work necessary to earn the post tax income required to buy a bottle of whisky, - see how the complications start to creep in in terms of net income after taxation, and is that just central government or all such, e.g. property taxes?, i.e. we're really talking disposable income, which, of course, is subject to other factors in terms of "real" disposable income, i.e. "real" in the sense of being after necessities such as the mortgage have been paid for the month ..........

If any subsidies come into play, then the picture only becomes more complicated.......

The more that you look into the subject, believe me, the more complicated it gets !!

David

[emanday]

Why not take whisky as a perfect example - and that within living memory!

My father earned pretty decent money. We were certainly better off (but hardly well-off) in comparison to some. Yet my father still had to save up with the local off-licence for his Ne'erday bottle. It was the only time of the year that we ever had a full bottle of whisky in the house!

As a whisky drinker myself, these days, there is always a bottle of decent malt in the house.

[Jamboesque]

Thanks Guys………

Just what I wanted, a clear and unambiguous answer……

I’m still none the wiser having re-read the explanations and examples given on the website, thought provoking as they are.

I am tempted to use the Average Earnings calculation as the description implies relative values of wages, other income or wealth and as I’m only concerned with the amount of money left to family members.

The cost of alcohol issue brought up by David and others is certainly topical with the executive/government taking issue with the teenage binge drinking problem. I remember when you had to check your wallet before going out with pals and were looking to buy a couple of rounds, now it’s no problem, at least in my case. The limiting factor in my drinking is my ability to recover from a few pints rather than the cost.

Interesting discussion tho’

Jack