by ohthatpatrick Sun Feb 21, 2016 8:08 pm
When you see a comparison between an old price and a current price, they often say the old price is adjusted for inflation.
For example, say that milk cost $1 in 1970 and cost $2 in 1990.
Does milk cost twice as much in 1990?
Not necessarily. You want to compare the higher cost of milk to the higher rates of income people might have, or compare it to other goods and services.
If the median income in 1970 was $30,000 and in 1990 was $60,000, then milk is not really twice as expensive as before. It's the same price. Its cost has risen in proportion with wages.
If the cost of milk in 1970 were adjusted for inflation, we would say that it cost $2 in 1970. That figure allows someone to immediately compare the cost of milk in 1970 with that in 1990 and conclude, "Oh, milk is still the same price."
The author of this argument could have tried to argue that going from $100k in 2001 to $500k+ this year is not really "five times as much" because inflation is contributing to making the current price $500k.
He could have said that $100k in 2001 is equivalent to $300k in "today's dollars". That would mean that we really only went from $300 to $500 ... that we're spending almost twice as much (but not FIVE times as much).
But since the figures were already adjusted for inflation, he can't make that argument.