Undercover Economist

Lost in Music

My troubles began while I was tidying up my CD collection, the decaying fruit of a misspent youth. I don’t mean alphabetising it, merely sorting through the piles of scratched silvery discs and putting them back into their cases. The process reminded me just how much music I don’t listen to, simply because of the archaeological dig that would be required. And so I started to think of copying all this music into some wonderful electronic box, and chucking the CDs away.

After a bit of research, I now realise that I have a dizzying range of choices – media PCs, iPod docks, dedicated music servers and wireless “bridges”. Don’t ask me to begin to enumerate the pros and cons, although it seems clear that most of them do things with music that it would have been hard for most of us to imagine 10 years ago. The human response is bewilderment. The economist’s response, of course, is “I wonder how many of these gizmos are in the inflation statistics?”

When I was a boy, there were no CDs. (The CD is 25 years old this year; The Visitors, by Abba, was the first one produced.) The original CD players were ludicrously expensive, so not many people bought them. Only when the price came down did people embrace the CD format.

That makes things difficult for the bean-counters who compile the inflation statistics. The Office for National Statistics (ONS) sends surveyors out to the shops once a month; the surveyors take a note of the prices; someone at the ONS adds up all the prices, and we see how much inflation has taken place in the past month. CD players have been falling in price and improving in quality for years, which should show up as a contribution to lower inflation.

But it is precisely when the price falls and quality improvements are most dramatic that they make little or no impact on the inflation statistics.

Continued at ft.com, subscription free.