Progress

by Russ Roberts on April 5, 2011

in Standard of Living, Technology

Great post from StormDriver comparing the first mobile computing device, the Osborne I to the iPad 2 (HT: Hacker News 20). Read the whole article, but here’s a set of summary charts. The iPad 2 is a little cheaper and a little more powerful. Thirty years of progress.

 

 

 

 

 

 

 

BTW, the price is corrected for inflation in some way. The nominal price of the Osborne 1 was $1795.

Be Sociable, Share!

Comments

comments

21 comments    Share Share    Print    Email

{ 21 comments }

Sandre April 5, 2011 at 1:20 pm

You should really compare it with Motorola Atrix 4G.

Speedmaster April 5, 2011 at 1:24 pm

When I see things like this it makes, in my opinion, government claims of official inflation numbers very suspect. How do you compare apples to apples when things advance so fast like this? While in VERY rough terms they are the same product, in reality the iPad is light years beyond the Osborne.

JohnK April 5, 2011 at 1:28 pm

Things like this take much steam out of arguments about “wage stagnation”.

Mark T April 5, 2011 at 5:23 pm

Not if you have invested your entire academic life and associated all your status with those arguments.

alan April 5, 2011 at 1:31 pm

brb, gonna compare a cell phone to a telegraph and make chart

vikingvista April 5, 2011 at 1:35 pm

Are there any economists who try to quantify technological improvements when doing price comparisons over time? If so, how do they do it? How do you compare the value of a product now to its value at a time when it didn’t even exist? Even conceptually, I have difficulty thinking about how such a quantification could reasonably be approximated.

But clearly the change is substantial. So if it can’t be reasonably estimated, how can any single numerical estimate comparing quality of life or prices over time be taken seriously?

LukeM April 5, 2011 at 3:27 pm

I read on the WSJ blog just the other day that two economists have attempted to do this:

“Back in the days of magnetic-tape memory, the annual benefit was pretty small — somewhere between zero and about $6 for the average American, adjusted for inflation, depending on the method of calculation. But by 2009, the price of computing power had fallen more than 99.8% and personal computers had become a lot better and more widely used. As a result, the welfare gain rose to somewhere between $1,300 and $2,100 per person, the economists’ estimates suggest. Ballpark average: $1,700.”

http://blogs.wsj.com/economics/2011/04/02/number-of-the-week-pcs-make-americans-500-billion-richer/

So there you go, there’s your answer! ;)

vikingvista April 5, 2011 at 3:49 pm

Thanks!

kyle8 April 5, 2011 at 4:44 pm

I need to read more on this subject, but in my view you would have to use a static comparison. For instance, how many man/hours of time did you save by using this device?

Very hard to do.

Speedmaster April 5, 2011 at 1:54 pm

>> “Are there any economists who try to quantify technological improvements when doing price comparisons over time? If so, how do they do it? How do you compare the value of a product now to its value at a time when it didn’t even exist?”

I think you nailed it. One of the classic example I see is how do you account for inflation if the of bed sheets rose from $60 to $75, but at the same time the thread count went from 200 to 400? That’s tough enough. But the change from the Osborne to the iPad is so substantial that I think it defies realistic comparison.

Look at even less dramatic changes, how do you account for the much much improved reliability of cars over decades? Or even speed improvements in PCs over just the last say 5 years?

E.G. April 5, 2011 at 3:07 pm

Excuse my economic ignorance, but isn’t that exactly what a “price” captures? If a 200 thread sheet costs $60, and a 400 thread costs $75, than that is the additional value people who buy the 400 thread one, gain from it.The same goes for computer power. The comparison of 2 devices is probably not correct; its the comparison of the price of 1 additional MB or 1 MHz (or whatever) that matters.

I don’t know how economists compare things, but a unit of comparison is not a “car” or a “computer”. Its a unit, of some sort. A “car” or a “computer” is an aggregation of hundreds of units of comparison

kyle8 April 5, 2011 at 4:51 pm

Correct, but I think what speedmaster was suggesting was that some products undergo a near quantum leap in quality as well as adjustment in price. Cars are a very good example.

For just the purposes of family transportation you could compare the average four door sedan of the 1970′s with the average four door vehicle of today, but the comparison would not be accurate. Since the old cars were good for only a few years, and were not real safe or reliable. Whereas now, even a quite inexpensive auto is designed to be very safe, and to last for many years.

Likewise, I spent a lot of time playing games on my old Commodore 64 computer. (and it was expensive). But it doesn’t really compare with the laptop I am currently using. It does word processing, surfs the web, plays games, much more, and it only cost $300.

Mark T April 5, 2011 at 5:21 pm

“you could compare the average four door sedan of the 1970′s with the average four door vehicle of today, but the comparison would not be accurate. Since the old cars were good for only a few years, and were not real safe or reliable. Whereas now, even a quite inexpensive auto is designed to be very safe, and to last for many years”

That seems very easy to quantify actually. The mean or median duration of ownership and the mean or median resale value for both periods should be computable pretty readily.

You would need to introduce some assumptions about future earnings, medical costs, etc. to quantify the safety benefits but they are estimable.

With all the economists on the government payroll, it seems like it would be a manageable task.

E.G. April 5, 2011 at 5:45 pm

But thats what I said; all those are units which can be quantified independent of the “car”

vikingvista April 5, 2011 at 6:15 pm

“If a 200 thread sheet costs $60, and a 400 thread costs $75, than that is the additional value people who buy the 400 thread one, gain from it.”

No, that’s just the market price. If you saw a sheet priced at $50 at one store, and the exact sheet for $40 at another store, would you not get more net value from the latter trade than the former? When Henry Ford’s manufacturing processes made automobiles cheaper, that wasn’t because people valued automobiles less than they used to.

A market price only comes close to reflecting precise trade preferences for those very few people at the margin. The vast majority of people would be willing to pay more (and do trade), or would only be willing to pay less (and do not trade). Technological and productivity advancements capture more of the latter, resulting in more of them being willing to trade.

Slappy McPhee April 5, 2011 at 3:00 pm

Atleast once a week I explain to my 10 month old son about the 13 inch black and white TV I had to use, while there is a 50″ plasma for him to watch Blue’s Clue’s. He usually just stares at me then looks for his mama.

JCE April 5, 2011 at 4:09 pm

that’s fu****! unbelievable!

Peter April 5, 2011 at 5:13 pm

What? Does this suggest that moderate deflation over time is somewhat natural due to advances in technology resulting from human action and the division of labor? Don’t tell the Fed

vikingvista April 5, 2011 at 7:32 pm

…or the monetarists.

mark April 5, 2011 at 10:39 pm

But I thought we were all getting poorer and incomes were declining for all but the top 10%???

Michael E. Marotta April 6, 2011 at 6:59 am

The key is that there is no legal definition of what a “computer” is and no government licensing for “programmers.” Anyone can claim anything. Read the licensing agreements. “No warranty for merchantability or fitness of use…” They promise nothing, yet deliver the universe. Banking on the other hand…

Previous post:

Next post: