Wednesday, December 1, 2010

PNC 12 Days of Christmas Price Index

If you have followed this blog for more than a year, you probably know about the PNC Wealth Management 12 Days of Christmas Price Index.  The index is based on the old Christmas carol wherein a true love showers the target of his or her affections with an assortment of presents – each corresponding to the 12 days of Christmas. I highlight it every year during the holiday season. I think it's a fun and interesting way to introduce economics and economic measurement.

As usual the folks at PNC have done a great job, providing explanations and teacher resources. My only concern this year is that those of you with slower systems or who lack certain computer capabilities in your classroom won't be able to enjoy it.

Nevertheless, I hope you enjoy it as much as I did.  I suspect you will be surprised by many aspects of the index this year. I know I was.


Faizan Qadeer (fizzy) said...

This is the first time I heard about the 12 Days of Christmas Price Index and it was truly surprising. It's hard to believe how the prices are nearly doubled for most of the products compared to 20 years ago. Since most people refer to products being cheaper at a much earlier time. While this presentation is a great basis to show a typical price increase over time, it doesn't explain as to what's the cause of this certain change. That's why I think they should mention more about inflation in next year's CPI presentation. In my economics class, we used to look at the weekly measurements of housing prices, food & energy, etc., (IHS Global Insight) along with that we also learned about the PPI (Producers Price Index) and the GDP Deflator. In addition, there are a variety of index measurements that some individuals even try to find out in order to predict the future status of the economy.

Tim Schilling said...

Actually, within each year of the index, they usually explain what caused the change. They weren't as specific this year - which was one drawback. But check previous years and I think you'll find some explanations.

If you can't find previous years on the PNC web site, you can probably find links in my blog for the past few Decembers. Hopefully, they still work.

Christina said...

Very cute presentation! But my main question is what has caused this increase in prices? Is Christmas really that expensive?

Matt Lopez said...

This was very interactive and was to a point enjoyable, pulling the tabs, watching the animations and what not. But the most interesting facts were by far the difference in the prices from last year and the spread of prices through the twenty plus years this has been taken. The main question i have though is why does this matter? what does it exactly show? is it showing the certain phase the economy is? also i was wondering if this is adjusted to inflation becasuse of recent helping out of the government such as QEII and other events.

Corinne W. said...

That was a really neat how they found the prices for the gifts in the story! Like Faizan, I was suprised to hear how much a lot of markets went up, not compared to 20 years ago, but comparing to just 1 year ago! I was also suprised to find out there were markets for some of those things too! I never would have guessed there'd be a market for turtle doves or calling birds! I can see why a lot of those things went up, though. I wasn't shocked to see that the dancers and drummers went up. Because of the tough economy that seems normal for a service. Guess i won't be getting any drummers for my christmas party this year!!

nofreelunch-Tamy, Miranda, Sarah said...

It is very interesting to see how much the prices have sky rocketed since last year alone. As we learned, inflation over the past 20 years has significantly affected these products, and since no one actually buys these gifts (not that we know of anyway), I wonder how the price of normal gifts has fluctuated over the past 20 years?
I'm curious to find out the effect to which the Fed's new policy to increase money supply has affected these prices? -because as we have learned, an increase in the money supply, raises inflation in the long run.
~Merry Christmas to all

Tim Schilling said...

A couple of you have speculated whether recent Fed actions have been a factor in the price increases shown by the index.

One of the things about monetary policy is that it takes a long time to have an impact - as long as year and sometimes more. As a result, anything the Fed would have done this fall won't likely show up until next fall - if it shows up at all.

I think someone also asked about the relationship between this index and consumer prices. Please note, the two are not related. Each index tracks the prices of a very select group of items. Because neither index has any items in common with the other, the results will be significantly different.

Enjoy the holidays.