Tuesday, October 07, 2008

Etrog pricing

The Mishna (Meilah 6:4) assumes that an etrog costs 1 perutah, roughly equal to 1 US cent.

The average etrog nowadays in Israel seems to cost about $10. Of course it's more in the US.

Thus, etrogs are about 1000 times as expensive now as in the time of the mishna.

That seems exorbitant. But a 100000% price increase over 1800 years corresponds to an annual inflation rate of just 0.38%. Which as any economist will tell you, is extremely low.

So maybe we are not getting ripped off after all.

5 comments:

bachrach44 said...

The low inflation rate actually makes sense. Over time food has slowly decreased as a percentage of GDP, so you would expect food to increase in price at a slower pace than other products.

ari said...

hmmm.... are you sure your analysis is correct? A peruta is roughly equal to 1 us cent because the metal in a peruta is worth that much. But if you are on a gold (or copper or whatever) standard, inflation isn't as relevant. Or maybe I'm wrong about that...

Beisrunner said...

No, to be honest I'm not sure at all, but it made for an interesting post.

Ari said...

somewhat relevant, from wikipedia:

Under a gold standard, the long term rate of inflation (or deflation) would be determined by the growth rate of the supply of gold relative to total output. Critics argue that this will cause arbitrary fluctuations in the inflation rate, and that monetary policy would essentially be determined by gold mining

Beisrunner said...

That's extremely relevant. It shows that my analysis is not technically incorrect, but it is, as they put it, "arbitrary".