In March 1963, comic book fans
fell in love with the first issue of Amazing Spider-Man, an account of
Spidey battling the Fantastic Four. The price at the newsstand? Twelve cents.
In March 2007, more than fifty years later, issue #540 of Amazing
Spider-Man hit comic book stores. This time around fans had to shell out
$2.99, a whopping 2,400% jump in price.
Remembering the past price of
things is important because we base many of our purchases on our knowledge of
what a "good" or "normal price" is. Take buying milk at
the local grocery store, or the cost of taxi fare to the airport, or monthly
purchases of Amazing Spider-Man. We can remember the recent price for
these things quite well, and these memories protect us from paying too much
for something. But as time passes we lose touch with the old prices, most of
which have been rising for so long now that any memory of what they once were
is hazy, non-existent, if not irrelevant.
Which is why I was quite excited
to stumble upon the historical retail price for Amazing Spider-Man
from the title's debut in 1963 all the way to the present. Here is a
fixed-in-time record of one consumer good which has stayed relatively
constant in quality and nature over a long period of time. We may have
forgotten what happened to the price of milk, but here at least, is the exact
price of our Spider-Man fix.
Cover prices of Amazing
Spider-Man remained fairly constant in its first five years of existence.
But in 1969 prices began a slow and steady upwards move that continues to
this day. The temporary large spikes that show up in the chart in the early
1990s marked a boom period in the comic industry, not unlike the Internet
stock mania of the late 1990s or today's housing boom. Collectors and
speculators had begun to flood the market, and to meet their demand for
unique investments with appreciation potential, comic book publishers started
printing expensive special-edition comics with holographic covers, chromium
covers, collector cards, etc. Print runs increased dramatically, overall
supply expanded. This boom had effectively ended by the late '90s and
Spider-Man has since gone back to standard pricing and sizes.
Also important to understanding
the rise in Spider-Man's price is the number of pages per issue.
One way publishers can increase
prices is to keep the retail price of their product constant while reducing
the number of pages. Note how in the early 1970s, pages per comic stealthily
dropped from 23 to 17, and stayed there for the next ten years. These gradual
page reductions were probably less apparent to readers than more overt
increases in the sticker price. The same thing happens when potato chip
manufacturers decrease the number of chips in their bags while keeping the
price the same.
We can create a simple
quality-adjusted price for Amazing Spider-Man by calculating its price
per page. Note that comparing the past price of a good to its present price
is terribly difficult, if not impossible. A multitude of changes in
technology and quality have occurred between the Spider-Man of 1963 and 2007,
many of these changes (especially artistic innovations) unquantifiable. Our
measure, for instance, doesn't take into account changes in paper quality,
thickness, and brightness, nor improvements in the techniques for drawing
Spider-Man, nor technological advances in color printing.
Nevertheless, the general shape
of the graph — a rising per-page price over time — is a valid
one.
Whose Fault Is It?
Basic economics tells us that if
the demand for Amazing Spider-Man increases at an existing supply,
more will be offered for it and the price will rise. Profits at Marvel,
Spider-Man's publisher, would grow, and managers at Marvel would therefore
increase the supply of comics, or competitors would enter the market with
similar products. This increase in supply would reduce prices and profits.
Conversely, a drop in demand should result in a decline in price, profits,
and supply.
Below is a chart showing
circulation statistics for Amazing Spider-Man over the years.
Not exactly stellar. Except for
the boom years in the early 1990s, the title's popularity has actually waned.
That this hasn't caused a drop in prices seems to defy economic logic. Even
the dramatic plummet in demand for Spider-Man from 1994 to present day has
been accompanied by more than a doubling in monthly prices from $1.25 to
$2.99. What gives?
To answer this conundrum, let's
look beyond the price of Spider-Man to the price of all goods. The chart
below compares the price of Spider-Man to that of Time magazine,
another paper product, as well as the Consumer Price Index.
Not only the price of
Spider-Man, but also Time, and indeed all consumer goods have been
consistently increasing since 1963. (Note that the measurement of CPI should
be viewed with a critical eye. Here and here are several articles
on Mises.org that deal with the problem of measuring broad consumer prices). Problematic
though the CPI may be, the general conclusion that prices have been rising is
inescapable, one that most people's personal experience confirms.
This general rise would seem to
imply that over time, demand for goods has been running ahead of supply,
pushing prices up. This too goes against economic logic. If prices rise,
entrepreneurs react to this signal by increasing their firms' capacity to
produce. Supply will naturally increase in a compensating manner thereby
exerting downward pressure on prices.
Another way to look at it is
this: with a growing demand for all goods and the corresponding increase in
their prices, consumers would now have to spend more of their money on Amazing
Spider-Man, leaving less for, say, Time magazine. Demand for Time
would fall, leading to a decline in prices. Yet all prices have been rising.
In order to understand why the
price of Spider-Man, Time, and all other goods have been rising, we
must consider the opposite side of the equation, the supply and demand for
money. When a comic book fan buys an issue of Amazing Spider-Man, they
are exchanging the paper on which Spider-Man is printed for paper on which
money is printed. Though we often assume that money is simply an invariable
unit of measure, it too is subject to the same forces that a comic is.
If the demand for dollars rises
— say people want to hold more money in their wallets — the value
of a dollar will rise as well. This rise means that a dollar will be able to
acquire more goods than before, and that all things staying the same the
prices for goods will fall. Conversely, if the supply of dollars increases
— say the government has issued new currency — the value of the
dollar will decline. More dollars will be spent, pushing goods prices up so
that a dollar will be able to buy fewer goods than before.
The chart below shows the yearly
printing of new issues of Spider-Man versus that of dollar bills.
This shows that the rate at
which new dollars are being printed each year has been increasing far faster
than the rate at which Amazing Spider-Man issues are being printed. More
new money is chasing fewer comic books, so the price of comics has been
increasing. Indeed, we see the same effect for Time magazine and
almost every consumer good out there. More money is chasing goods, leading to
a decline in the value of dollars, or, alternatively, a rise in all prices.
Though some comic fans will be quick
to put the blame at the foot of Marvel for price increases, they would be
more correct to blame the Federal Reserve, the "publisher"
responsible for the creation of our supply of dollars. Though society has
come to accept the general rise in prices as a normal part of our lives,
before the founding of the Federal Reserve and the removal of the US dollar
from the gold standard, prices held relatively steady.
Why have comic book prices been
increasing faster than both Time magazine prices and the CPI? According
to the Austrian theory of the business cycle, expansion of the money supply
does not affect all prices equally. The process starts with central banks
like the Federal Reserve creating new money and lending it to commercial
banks at rates below what bankers would otherwise lend to each other. These
banks then loan this newly created money to their clients. There are many
things clients can do with credit. If they all choose to buy real estate,
then housing prices will rise.
The former real estate owners,
now flush with cash, may all choose to spend it on Amazing Spider-Man
comics. Spider-Man prices rise. Profits accrue to Marvel managers and
shareholders who use their new stores of cash to buy issues of Time
magazine. Only now does the price of Time rise. It is in this wavelike
manner that newly created credit influences the general price level. Prices
rise at different times and rates, and only after some time will the full
force of an increase in the money supply be realized.
Spider-Man comics may be rising
faster than other goods because they have been nearer to the source of this
new credit. One reason for this may be the collectible nature of comics. In
the 1980s, the idea of buying comics for price appreciation and investment
rather than enjoyment began to take hold. This led to the great speculative
mania of the early '90s, followed by the inevitable bust. Even Marvel
couldn't survive — it went bankrupt in 1997. But the idea that comics
can be bought both for enjoyment and investment means they attract more
speculative capital than Time and other simple consumer goods.
For all those disgruntled comic
buyers: Keep buying comics. As long as the supply of dollars is controlled by
governments, the amount of money in the economy will continue to explode and
the value of a dollar in your bank account will erode. Comic books, on the
other hand, will keep their value, and may even provide some reading
enjoyment.
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With
Study Guide: $32
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"The
Federal Reserve …the 'publisher' responsible for the creation of our
supply of dollars."
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John Paul Koning
John Paul Koning is a financial
writer and graphic designer who runs Financial Graph
& Art. His Recent History of Gold, 1954-2009 Wallchart
is available here.
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