Question for Economists: Calculating Real Wages

Can someone point me to the state of the art on methods for calculating real wages, especially how changes in technology are accounted for in changes in purchasing power. How, for example, is the availability of a drug or labor-saving appliance or new source of entertainment that was not available 20 years ago included in the estimate of the real wage? I know of several sources of information on this problem, largely in the semi-popular press, but am largely interested in discovering if there is a definitive academic article or book (or several) that deals seriously with this issue, and is recognized as the latest and most definitive word. Thanks.

  • Grant Gould

    I was recently rereading Epictetus and found myself wishing he was incoherent in basically exactly this way. He totally nails the “happiness as indifference to love and praise” thing (indeed that happiness relies on indifference to _happiness_). But he has no story then about why we ought to strive for anything other than indifference.

    Perhaps I need to reread Smith too.

  • I particularly like the way Smith deals with the Stoic view that we should eneavour to see all things in the same light as “the great Superintendant of the universe”. Smith suggests that the plan that “Nature” has “sketched out for our conduct” is that “the events which interest us most, and which chiefly excite our desires and aversions, our hopes and fears, our joys and sorrows” are those “which immediately affect ourselves, our friends, our country”.

  • DMonteith

    A Theory of Moral Sentiments may in fact be a load of hooey, and I have no intention of finding out for myself whether or not it is, but there is a large body of empirical evidence that points to the fact external rewards (i.e. praise, money) can reduce both the quality and quantity of creative output. I’m not sure that this fact has anything to do with moral sentiments, but it’s certainly not obvious that indifference to praise would result in universal poverty.

    But good rants are almost never closely wedded to facts on the ground, so carry on!

  • chris

    Smith is talking about what makes men happy, not happiest.

  • Venu

    I loved this post.

  • lex

    Absolute fave line from the book:

    How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number.

    So tell me, Sir, why are you carrying two cell phones, and pager, a PDA and a camera? And really, what’s up with that fanny pack?

  • Guest

    TMS is a book that’s always intrigued me, but never got around to reading it. Your post has provoked me to dig into it – soon.