Budget from 1920s Journal

Dealing with a budget can be difficult in any task, due to the fact that it puts constrictions and parameters on what you are doing or trying to accomplish. For any important company, organization, or in this case, a college, running a budget is crucial to success. Times have definitely changed, along with the value of our American currency. In 1922, a smaller budget would have been able to accomplish a lot more things than that of a small budget today.  In 1922, a student at Concordia set her budget at 155 dollars. That was able to buy her things such as candy, cards, toothpaste, pencils, stockings, lunch, and schoolbooks. To compare the price of one of her items in 1922 to the price of an item in today’s price, we need to inflate the price to turn 1922 dollars into today’s dollars. We use a simple economic equation to do so.(1)

Amount in today's dollars = Amount in year "T" dollars X Price Level Today / Price Level in year "T"

If we do this with a pencil priced at .05 cents in the year 1922 compared to a price of a pencil today, we need to first find the price levels of 1922 and 2013.  According to the historical consumer price index, which is a measure of the overall cost of the goods and services bought by a typical consumer, in 1922 the CPI was 16.9 and currently in 2013 it sits at 233.9. (3) After putting those numbers into the equation we find out that a pencil worth .05 cents in 1922 is worth .69 Cents in 2013.

Knowing this, we can see how the times have changed quite a bit. With the consumer price index at such a differnce, based on different time periods, we are able to see a big change in the dollar.(2) If the Concordia student were attending the college in today’s time, a 155 dollar budget may have been quite a small budget to follow. Through this budget in the journal of this Concordia student, we are able to understand that the cost of going to college has drastically changed in today's age. So it begs the question, if a student were given 155 dollars to last a semester at college, would they be able to do it? If we say the semester is roughly four months long that means the student would be able to spend one dollar and four cents a day.

      (1) N. Gregory Mankiw, Principles of Economics: Sixth Edition (South-Western College Pub, 2011), 522.

      (2) Mankiw, 514.

      (3) C. Phillips, CPI History, accessed December 8, 2013. http://www.forecast-chart.com.