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Inflation: The Price of a Lost Tooth

Aug 31, 2013 • Behavioral Economics, Economic Humor, Households, Macroeconomic Measurement • 163 Views    No Comments

According to a Visa survey, since 2011, the tooth fairy has given children 42% more cash:

  • 2013/$3.70
  • 2012/$3.00
  • 2011/$2.60

What is going on?

If tooth fairy cash had just kept up with inflation, then $2.60 in 2011 would have been equal to $2.70 today. However, thinking of today’s 6 year old’s parents, in 1982, a 6-year old getting $1.50 would have received the equivalent of $3.62 today.  That actually means, looking at a longer time period, little has changed.

We should note that based on location, totals vary. That Visa study indicates that children in the Northeast got the most at $4.10 a tooth. Next was the West at $3.70, the South, $3.60 and then, at the bottom, the Midwest with $3.30. Also, because all of our numbers are averages, you do have kids getting more (even $120!) and less.

Here is how median income varies regionally. There is some tooth fairy correlation.

Bureau of the Census Median Income 2011

From: US Bureau of the Census

From: US Bureau of the Census

 

From: NY Times Economix, "Yes, We Have No Inflation."

From: NY Times Economix, “Yes, We Have No Inflation.”

Also, above, you can see how the tooth fairy spike compared to the inflation rate. Adding 2013 to the graph, you would see a 12 month 2% inflation rate (seasonally unadjusted)

 

Sources and Resources: This NY Times article has more about the Visa study while economix provides insight about why some inflation is desirable. As for the fun stuff, do go to the BLS interactive inflation calculator.

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