Problems With Thanksgiving Economics
Something is very wrong with this graph from CNBC:
During 2011, Thanksgiving dinner prices totaled $49.20. In 2012 the number was $49.48.
Did the cost of the holiday dinner rise by 28 cents? Or, as CNBC said in its headline, did “Thanksgiving Prices Gobble Up More of Thanksgiving Bill?”
If you go to the BLS inflation calculator, $49.20 in 2011 was the equivalent of $50.22 in 2012. But the meal cost $49.48! So really, we spent less!
As the deputy editor of the business section of the Columbia Journalism Review (CJR) explains, to grab our attention, the media need to create hype or outrage or tension. Add to that a problem with, as he says, “journalistic innumeracy” and you have annual Thanksgiving headlines that are totally misinformed. You also have a graph that is misleading because it ignores our real purchasing power.
On November 14, The American Farm Bureau Federation (AFBF) reported that the price of a 2013 Thanksgiving meal will go down to $49.04 from last year’s $49.48. Trying to inject some life into a boring statistic, the LA Times said that prices fell from last year’s record highs.
But they weren’t a high point. If you look back to 1986 when the AFBF first published its Thanksgiving price index, the total was $29.86. Using the BLS inflation calculator, you get $60.21 as the 2012 equivalent. Yes…that means we were actually spending close to $10 less in 2012.
It only gets worse when the CJR journalist also points out simple math errors–like CNBC saying the increase was 3% when actually it was .06% and, that error only compounded the inflation that they ignored.
But…would you read an article with the headline, “Thanksgiving Bill Flat?”
And finally, from the AFBF, here is the shopping list that they say provides “an informal gauge of price trends around the nation.” You can decide if these items are useful for judging inflation.
Sources and resources: You can listen to the Thanksgiving price story in an NPR On the Media interview or read the story in the Columbia Journalism Review. To have some price fun, the BLS inflation calculator is here while you can always look at the original AFBF Thanksgiving dinner price list to ponder how you would report them.