I’ve been reading a lot of discussion over the past several years on this forum about the costs associated with this hobby. One recent thread comprised nearly 300 responses! Many have the impression that the hobby is getting too expensive. Others have the opinion that the hobby is getting cheaper. Finally, others tend to compare this hobby with other hobbies to show how expensive or inexpensive it is.
As a trained economist, I think it would be interesting to explore this question more formally. Using the tools/methods of economics would, I think, give a more robust answer to the question than the anecdotal “Well I paid X in 1960 for a Y and now it costs Z” arguments. Would anyone be interested in reading and participating in such an endeavor? I would need the help of some of you to collect a few data points and some opinions. None of this would entail formal research on your parts but the tutorial might get a bit into economic theory.
We might be able to get to the root of the question of whether the hobby is getting “too expensive” and, more importantly, why?
I’m not sure that would help, any more than a debate on abortion, war, or stem cell research is likely to change anyone’s minds. My impression from the aforementioned threat (it just won’t die!!!) is that the sides are so entrenched, it may be best to leave it alone.
Seems to me we have the best selection of the highest-quality products this hobby has ever had (or at least in the 20+ years I’ve been in it) yet some people don’t want to pay more for it. Some want P2K quality at Tyco prices. Not sure even an economist can unbefuddle that kind of warped expectation.
Very interesting suggestion Ed. I was too young and too poor to buy anything way back in the 40’s and 50’s, or even 60’s for that matter. However, I think that the real issue is the amount of money that people have available to them to spend on this hobby, as opposed to COL increases over the years. As an example, if you breakdown the hobbyists into age groups as one parameter, you will obviously see that a 12 year old can only afford just so much at any one time, or, per year say. Then there is the " early" working class of say age 18 through 27. They may be college guys, not making a lot of money yet, trying to pay for an appartment, a car, etc. Next you have the middle working class. They make up the age group of age 28 through about age 47. They are raising a family, buying their first home, and all the other expenses that families face in this time frame of life. Next we have the 48 through 65 group. For the most part, this group is now preparing for retirement with their savings ( or should be ), their families are grown, they have more disposable income to buy second homes, campers, hobby stuff, etc. You will be making your highest income of your working career during these years ( or should be if you did things right ). And finally, we have the last group, the Retired group, ages 65 until that great train ride to the sky. This great is now living on FIXED income for the most part, comprised of Social Security monthly checks ranging from $1200 to $1950 depending upon what age they retired at, 62, 64, 65, etc., and if they paid in the max the last years of their working career. Also, if they are married, their spouse will get an SS check for either 1/2 of what their husband ( or wife) recives, or, a higher amount based on their working income, whichever is GREATER. Then of course there is any savings, 401K’s, investments, and pension monies that they can draw from. This age group is “reported to be” the LARGEST of the MRR buying faction. I don’t have the numbers to prove this out. So
You make some good points. I’m not particularly interested in changing opinions in this area. I’m more in the education realm and hope to give forum members who haven’t formed hardened opinions the tools to looks at what is happening in the hobby and, potentially, make more informed decisions going forward. This is a very interesting market that faces competitive, technological and demographic challenges. Understanding how these factors impact prices and options would, I think, be useful.
It appeares that when some of us get tired of the train room and its challenges, “discussing” imposible issues is a good distraction. Your suggestion of a new version might interest some.
I am curently sitting in hotel waiting for my wife to get her hair done. I would love to debate something that I have no control over, though stem cell research sounds more interesting. Sunday we finaly get on the Empire Builder. That will be more interesting. When I am back we can debate whether they got the paint sceme close to the prototype.
I really wish I had a good Ambroid kit along to work on.
As I mention time and again of late the BEST PRICE BUSTERS we have is our computers.Yet folk simply can’t accept that fact.Listen even buying one high dollar locomotive including shipping is still less then full price at your LHS.
There are deals to be found on the net prices even lower then the famous e-bay auction prices of the last few months.
See for yourself and then judge for yourself if you can still afford the hobby.
Ed, I hope you don’t mind my opinion, but I think it will have limited appeal, and those who don’t like the way it seems to be going will soon become vociferous opponents of either your method, your information, the opinions submitted on which you will be basing your work, and so on.
As stated above, those who argue for or against the various conclusions that have stemmed from previous debates are unikely to overtly change their positions due to face-saving issues, no matter what you and I conclude from the information we use.
However, let it not be said that I am not curious…[;)]
sounds interesting . if you decide to go ahead with it i have almost all issues of MR from present back to 1985 (and a few back as far as 1977) and can look up both manufacturer list price and the mail order ad prices on items for your comparisons
As a trained economist, I think it would be interesting to explore this question more formally. Using the tools/methods of economics would, I think, give a more robust answer to the question than the anecdotal “Well I paid X in 1960 for a Y and now it costs Z” arguments. Would anyone be interested in reading and participating in such an endeavor? I would need the help of some of you to collect a few data points and some opinions. None of this would entail formal research on your parts but the tutorial might get a bit into economic theory.
My degree’s in Economics too, and there’s only one absolute truth in Economics:
If all the Economists in the world were lined up in a row, they still wouldn’t reach a conclusion
And in any case, why would such an endeavor change anyone’s mind? I remember some right wingnut who was complaining about his income taxes on a different forum. This particular person got into an argument with a CPA who specialized in taxes. It didn’t matter that the CPA had the facts on his side. It didn’t matter that it was amply demonstrated that the original poster had no idea at all how the Federal income tax worked. It didn’t matter that his math sucked All that matter to the original complainer was his sense of victimhood. The facts don’t matter to anyone whose lifelong outlook is that he/she is a victim (most often of a conspiracy).
I couldn’t agree more. I’m not out to change anyone’s mind who has a hardened position. In fact, I’m not out to change anyone’s mind at all. I’m just interested in having a discussion that might help those without strong (any?) opinions on the subject to understand this market better and to possibly help them make better decisions moving forward. If somebody changes their mind about vendors or the hobby’s fate, so much the better but I won’t hold my breath! [:)]
OK, it looks like there might be sufficient interest in this topic to move forward. First, I would like to propose some rules/guidelines to make the discussion more fruitful. I know, I know, only trains.com makes the rules on this forum. However, from the standpoint of this thread, I would like the discussion to be limited to the topic at hand and the points discussed. Anyone is free, of course, to slap in a message about the price of eggs or whatever but, it won’t keep the discussion on track or as useful. IMHO.
First, let’s talk a bit about some generic concepts that many of you are more than likely familiar with. This may be a bit boring to some but it will lay the parameters for discussing some of the stuff that we care about.
Concept: DEMAND
Loosely defined, demand is the amount of a given product you are willing (not able) to purchase at differing levels of price. For example, you may be willing to pay $1.25 for a bag of M&Ms. However, as the price drops you might be willing to buy more. For a price of $0.75, you might pay for two bags. For $0.50, you might be willing to pay for 4. However, once the price reaches a certain low point, your desire to by more is lessened because of diminishing returns. So, for $0.05 per bag, you might only buy 10 even though your overall spending is less than if you would have purchased 1 bag at the original price of $1.25. Demand is usually graphed like this:
Concept: SUPPLY
Supply is the opposite of demand. It is the amount of product a company (or market) is willing to produce and sell at a given set of prices.
As far as issues of Model Railroader goes, I have copies going back to around 1946-47, although it’s more of a “spotty” collection of a few from each decade through the present day.
A lot of the hobby really is “apples and oranges” when it comes to economics: how does one compare the price of a DCC-equipped unit with a DC locomotive from an era when DCC didn’t exist? Exclude DCC entirely, or use the price of earlier non-standardized command control systems (hard to judge, as many were homebrew)? How does one compare a wood/paper Ambroid boxcar kit with a modern RTR boxcar? It’s like comparing the price of computers: a home computer 25 years ago cost about the same as a home computer today, but comparing an Apple II or IBM PC with a modern Mac or Pentium-whatever isn’t exactly a fair comparison.
You make some excellent points and ones I hope we can address as this moves along. The “apples and oranges” comparison is actually a good one for this discussion. Both are fruits and if you are in the market for fruits, you certainly might be buying one or the other. The concept of “substitutes” is a key one for us in the hobby. Keep 'em coming!
Dick,As far as retirement that will depend on several things to include retirement pay…I live on medical retirement through the union and the company I worked for.I can assure you it its a quite a few dollars more then Social Security SSI or DSS…We have members at the club on SS that still enjoys the hobby and can usually buy what they will but not as many as they did when working.
Now add the Blue Collar workers to your numbers-many leave those folk out but,locally we have more blue collar modelers then white collar-they are a buying force to be reckon with and the silent majority that votes with their wallets…
Think not Atlas started the Trainman line as entry level models no more then Athearn,Accurail,Walthers continue to build kits…These manufacturers knows the market better then we.They are tapping the limited budget modelers.
I dont think BLI made too much profit. The recent service of my F unit required labor, new speaker and time as well as shipping and insurance on both ends (Mine and thiers)
The post office probably made more net than BLI when the smoke cleared. Keep in mind I got my engine at a discount in a LHS who still made a small profit because the price was good.
Regardless of what I think BLI made on the unit in net profit I will still consider thier company for future motive power purchases. I use several strageties such as increasing hours at work and layaway to acquire items.
But the house comes first in everything and I can tell you that Walmart made a hell of alot more in profit than either the LHS’s or retail hobby manufactors. This year our Walmart spending is less than 10% of last. Everything is making a “Profit” on the budget while eliminating debt.
For example cut fruits in a box already cooled costs about $5.60 at walmart. In Jacksonville AR they sold very rapidly while Cantelopes sat in the Pallet box nearby. We purchase the Cantelope for maybe 2 for a dollar at a local food store and process it on the kitchen counter with a knife instead of buying the prepackaged fruit. Im sure the local food store made a small profit.
The convience of pre-packaged fruit attracted people because they cannot or will not take time, knife and stand over the counter slicing cantelope and the associated cleanup. They are probably too busy in thier maxed out 24/7 lives, short on sleep and dont have time for actual work in the kitchen. So they throw 5 dollars at the small package while Walmart laughs to the bank.
I do prefer to purchase factory assembled engines with sound and DCC included. I figure that you can purchase a engine without sound or dcc and install these yourself. The cost of doing that probably approaches Factory units with the added danger of service calls and costs if there is a error in installation.
Potentially an interesting idea, and I am prepared to provide some data toward your effort. But as others have said, what is the point? For example, I purchased an American 4-4-0 by Rivarossi in 1965 for $25 - at the time, the full retail price. I believe that by the time Rivarossi stopped producing them (1999?), the retail price was something like $119. Using the BLS’s consumer price calculator, $25 in 1965 would have equated to $132 in 1999 - pretty close to and actually slightly higher than the actual price. But one can get a very close knock-off, made in Eastern Europe, through IHC for about $60; what comparison does one use? And then, what about wages? In 1965 I was a teenager working a summer job for $1.65 an hour and I saved for five weeks in order to afford that model. Today, I am a seasoned professional who can easily afford $132 at any time for something that I perceive to need. And how does one compare quality issues? Stall switch machines are rather costly, but they are great - unfortunately, they were not available forty years ago. So it would help me, personally, if you were to explain a bit more thoroughly, your goals for this thread.
I think there may be some sources of “facts” that we do not have readily available:
MRR circulation data and demographic profile of subscribers. Not sure how much research Kalmbach does in its business as to age and income and spending patterns of subscribers and readers
Is there a trade organization that tracks company sales?
The fact that equipment and technology continues to evolve doesn’t hamper economic analysis. Price indices are the bread and butter of economic analysis
Demand reflects the elasticity characteristics. But what are they?
Some definitions and theory below—
Price elasticity of demand is measured as the percentage change in quantity demanded that occurs in response to a percentage change in price. For example, if, in response to a 10 % fall in the price of a good, the quantity demanded increases by 20 %, the price elasticity of demand would be 20 %/(− 10 %) = −2. (Case & Fair, 1999: 109).
In general, a fall in the price of a good is expected to increase the quantity demanded, so the price elasticity of demand is negative as above. Note that in economics literature the minus sign is often omitted and the elasticity is given as an absolute value. (Case & Fair, 1999: 110). Because both the denominator and numerator of the fraction are percent changes, price elasticities of demand are dimensionless numbers and can be compared even if the original calculations were performed using different currencies or goods.
An example of a good with a highly inelastic demand curve is salt: people need salt, so for even relatively large changes in the price of salt, the amount demanded will not be significantly altered. Similarly, a product with a highly elastic demand curve is red ca
Based on my experience, you may find it a frustrating prospect. I put up the chart below in a thread some months ago and was shouted down by our favorite gloom and doomer who insisted that the Consumer Price Index is a lie, that I picked the wrong decade for comparisons, and left out the key (Tyco, if I remember correctly) engine that proved all my other data was false. Oh, well.
The data is pretty straightforward. I simply compared advertised prices from September of 1970 with September of 2005. Using the Consumer Price Index (CPI), it’s easy to determine what the price “should” be in 2005. Comparing the 1970 price with the equivalent for the same item shows us if they are relatively cheaper or relatively more expensive. I also considered how many hours someone working at the Federal minumum wage would work to earn the item and compared those values.
As can be seen, almost all the items I compared were cheaper in 2005 than in 1970 when considering the inflation in intervening years captured in the CPI. Looking at the first nine items, only two items were more expensive: an annual MR subscription (11% higher); and an Atlas freight car kit in 1970 compared to an Atlas RTR model today (8% higher). One could argue, of course, that the difference in production values in MR such as color (it was balck and white with spot one-color in 1970) are part of that increase. And by the time one pays for paint and glue, the difference between the Atlas kit of 1970 and Atlas RTR of 2005 would be smaller. When the subscription cost per page of MR is considered, Sept. 2005 is actually less.
It’s interesting to note (line 10) that comparing the Bowser kit of 1970 with Bowser’s detailing kit to a BLI RTR loco in Sept. '05 shows the BLI only 8% more expensive! And I think all would agree that the BLI is a much better detailed and proably better-running engine.
