The Price of Nails since 1695: A Window into Economic Change

Daniel E. Sichel

No 29617, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper focuses on the price of nails since 1695 and the proximate source of changes in those prices. Why nails? They are a basic manufactured product whose form and quality have changed relatively little over the last three centuries, yet the process for producing them has changed dramatically. Accordingly, nails provide a useful prism through which to examine a wide range of economic and technological developments that touch on multiple areas of both micro- and macroeconomics. Several conclusions emerge. First, from the late 1700s to the mid 20th century real nail prices fell by a factor of about 10 relative to overall consumer prices. These declines had important effects on downstream industries, most notably construction. Second, while declining materials prices contribute to reductions in nail prices, the largest proximate source of the decline during this period was multifactor productivity growth in nail manufacturing, highlighting the role of the specialization of labor and re-organization of production processes. Third, the share of nails in GDP dropped back from 0.4 percent of GDP in 1810—comparable to today’s share of household purchases of personal computers—to a de minimis share more recently; accordingly, nails played a bigger role in American life in that earlier period. Finally, real nail prices have increased since the mid 20th century, reflecting in part an upturn in materials prices and a shift toward specialty nails in the wake of import competition, though the introduction of nail guns partly offset these increases for the price of installed nails.

JEL-codes: E01 E30 N11 N12 N61 N62 O14 O33 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-his, nep-lma and nep-mac
Note: DAE PR
References: Add references at CitEc
Citations:

Published as Daniel E. Sichel, 2022. "The Price of Nails Since 1695: A Window into Economic Change," Journal of Economic Perspectives, vol 36(1), pages 125-150.

Downloads: (external link)
http://www.nber.org/papers/w29617.pdf (application/pdf)

Related works:
Journal Article: The Price of Nails since 1695: A Window into Economic Change (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29617

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29617

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().