Economist Writing Every Day

I was reading “The Ultimate Guide to Barbie” the other day, and I noticed an interesting piece of data towards the end of the magazine: the original Barbie doll in 1959 retailed for $3. Today, according to the magazine, a Barbie costs around $14-19. And they further told us that adjusted for inflation, that $3 original Barbie is about $24 today.

I’m not sure exactly where they got that number. Using the BLS CPI tool, it’s more like $31.50. And while I appreciate the attempt to give us historical context, I think for the typical reader will still be a bit perplexed. What does it mean to say $3 in 1959 is equal to $24 (or $31.50) today? Well, it means that the price of Barbie dolls has risen more slowly than other goods and services (quality adjusted). But I think we can do better on the context.

Here’s my best attempt to give context:

The chart shows the number of minutes of work that the median woman would need to work to purchase a Barbie doll for her daughter. In 1959, it took almost 2 hours of work. Today, it takes only about a half hour (I’m using the lower range from the magazine, $14 for a Barbie today, although there are plenty of $10-11 Barbies on Amazon).

Another way of thinking about it: with the same amount of work, a working mother today could buy her daughter 3-4 times as many Barbies as her counterpart in 1959.

I deliberately used median female wages here to make another historical comparison. Women’s earnings have increased much more than men’s since 1959. Back then, median female earnings for full-time, year round workers was only 61% of male earnings. Today, it is close to 85%. True, that’s still not parity. And for those that know the history, you will also know that the closing of that gap has stagnated in recent years. But this is still some major progress during the Barbie Era.

Finally, as I have emphasized before, looking too much at the cost of one product over time has limits. What about other goods and services? A toy, even a well-known brand like Barbie, is a tradable good that can be manufactured anywhere in the world (it looks like Indonesia is where many Barbies are made today). So it wouldn’t be surprising that it has got cheaper over time. But what about all goods and services?

Here’s where inflation adjustments are most useful. Not for individual goods and services, but for looking at incomes over time. How much stuff can a given income purchase compared to the past? That’s what inflation adjustments are for. And this chart shows male and female median earnings in 1959 and 2023, with the 1959 figures adjusted to 2023 dollars using the PCE price index.

When we adjust for changes in all prices, not just Barbies, we can see that median female earnings have roughly doubled between 1959 and 2023. That’s not quite as robust as the “Barbie standard of living,” which allows you to purchase 3-4 times as many dolls. But 2 times as much stuff is pretty good. It’s especially good when compared with male earnings growth, which grew about 44 percent.

It should be obvious here that these are just the raw medians, not controlling for anything like education, experience, or occupational choice. Controlling for those will shrink the gap a bit more. But the gains for women in the labor market since the introduction of Barbie are large and worth celebrating.