The Amazing Spider-Man Battles the Inflation Monster
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.