Monday , 2 October 2023

Are We Running Out of Resources? Not According To This New Research

Are we running out of resources? The Simon Project explores the relationship between population growth and resource availability using four new concepts: Time Price, Price Elasticity of Population, the Simon Abundance Framework and Simon Abundance Index. This edited and abridged excerpt from the original article focuses on Time Price. Read the original article for information on Price Elasticity of Population, the Simon Abundance Framework and the Simon Abundance Index.

Time Price of Resources

The time price concept denotes the amount of time that a person has to work in order to earn enough money to buy something. To calculate the time price, the nominal (or current) money price is divided by nominal hourly income. Dollars and cents are thus converted to hours and minutes of labor. Source

The chart below shows the percentage changes in the time price of 50 basic commodities between 1980 and 2018.

It is important to remember that things can become more affordable in two ways. First, the money price can decrease. Second, hourly income can increase. The time price captures both the price fluctuations and the value of labor. The most recent update to our original study found that the average time price of 50 commodities fell by 72.34 percent between 1980 and 2018. Commodities that took 60 minutes of work to buy in 1980 took only 16.6 minutes of work to buy in 2018. Put differently, the time it took to earn enough money to buy one unit in that basket of commodities in 1980 bought 3.62 units in 2018. The compounded growth rate of abundance came to 3.44 percent per annum. That means that the affordability of our basket of commodities doubled every 20.49 years. Source

Observing changes in time prices over time provides a superior way of measuring abundance. A major advantage of time prices is that scholars do not have to worry about adjusting nominal prices for inflation, which necessitates a search for appropriate deflators and base years. Source

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