Here’s a picture of another small yet welfare-enhancing addition to humanity’s prosperity pool.
The item pictured here is a metal clip that’s about an inch in length. It and three or four other identical clips were on a new shirt that I just bought. Increasingly, these clips are replacing straight pins at the task of keeping new shirts neatly folded before they’re sold. These clips are an improvement over straight pins: they neither prick your fingers when you’re unfolding your new shirt for the first time nor do they leave small holes through the cloth of the shirt.
This improvement, while real, is also minuscule. It’s so minuscule that there’s no practical way that statisticians who are charged with making more accurate calculations of rates of inflation by using hedonic methods to control for quality improvements can account for it.
Because substantial amounts of the enhancement of our standard of living are the results of the accumulation of benefits from a continuing series of very small individual improvements (such as the replacement of straight pins by these clips), statistics cannot adequately or accurately capture the full measure of these improvements.
Our prosperity pool grows not only when big infusions of wonderful new goods and services (such as the polio vaccine and the smart phone) are made but, also – and perhaps even more importantly on the whole – by the steady accumulation of myriad small improvements (such as this inauspicious clip).