Cheap at Twice the Price?

"You could buy a whole dinner for a nickel. The problem was nobody had a g--damn nickel."

I'll never forget the late Vince Olsen's remark about growing up in the Great Depression. Yes, prices were low, but people didn't have the income to buy things--even necessities like food in some cases. The economy has come a long way since the 1930s, but people still worry about whether they'll be able to afford this or that if the price of this or that keeps going up. Witness gasoline.

This story from the Christian Science Monitor helps to put prices in perspective. Gasoline around these parts sells for about $1.90 a gallon as this post is being written. Adjusting for inflation, gas was commanding $2.87 a gallon in 1980. Thus, gas is actually cheaper today than 25 years ago. Not so for many of the things we buy. In contrast to gas, the inflation-adjusted prices of houses, cars, and college tuition are much higher than a quarter of a century ago.

Inflation in home and vehicle prices usually doesn't draw much rebuke. In contrast, both the price of gas and the price of college tuition have been subjected to intense public scrutiny, and some anger. Why the difference? My guess is that long-term, steady, but relatively small annual price increases sneak by under consumers' radar screens. It's when a price shoots up in big spurts that the public takes notice. That's true even when the long-term result is the same when prices go up slow-but-steady or all-at-once. Maybe it's easier to take a little pain for a long time than a lot of pain all at once.

I've seen some evidence that the public believes the price of gas is rising because of an oil company conspiracy. Where were those conspiracy theorists when college tuition rose 158 percent in inflation-adjusted terms? Maybe it's easier to imagine overpaid big shots in oil company boardrooms conspiring to fix prices than to imagine upstanding university administrators doing the same. Of course, as a college professor I 'd like to think that the public recognizes that the value of a college education is so high these days that it would be cheap at twice the price. Silly thought? Actually, the earnings of college graduates eclipse those of high school graduates by enough to justify even higher tuition, at least at my university. Since I've never been one to inflict pain on my students, I think I'll keep that to myself and hope college administrators don't find out.