In her latest article in the Economic History Review, Professor Sara Horrell unravels the intricate tapestry of household consumption and the consumer price index in England from 1260 to 1869. The study delves into the crux of England’s early economic growth, anchoring its explanations in the long-run level of real wages, a linchpin explored by scholars such as Allen and van Zanden.
While existing scholarship has meticulously scrutinized the validity of nominal wages, Horrell brings a novel perspective to the forefront by turning the spotlight onto the consumer price index, the often-overlooked counterpart in historical economic analyses. Allen’s method of pricing the quantities of goods considered essential for a ‘respectable’ standard of living proves to be remarkably tractable over time and space. However, historical and theoretical considerations underscore the limitations of relying on an unchanging pre-modern basket of commodities to capture the nuanced evolution of living costs.
The heart of Horrell’s investigation lies in understanding the shifting sands of consumption patterns over the centuries. The narrative unfolds with a detailed examination of the effect of allowing expenditure weights in the cost-of-living index computation to change. Drawing from a diverse array of sources, from medieval smallholders’ activities to early modern probate inventories and nineteenth century household budget data, the study constructs a rich collection of a labouring family’s budget at eight pivotal points over six centuries.
The result is a nuanced portrayal of the changing importance of broad commodity categories, reflecting shifts from medieval staples to industrialisation-era fare. The household budgets, collapsed into Allen’s commodity categories, offer a compelling visual journey through the transformation of consumption patterns over time.
However, the narrative does not stop there. Horrell employs existing price series to construct a chained-Laspeyres cost-of-living index, using the detailed expenditure accounts as the basis for the weights. This index, constructed from 1260 to 1869, is then juxtaposed against Allen’s ‘respectability’ basket and Clark’s Workers’ expenditure, revealing surprising parallels until the later eighteenth century. The divergence thereafter is attributed to the evolving dynamics introduced by eighteenth-century trade and the advent of industrial manufacturing.
In a compelling conclusion, the blog post underscores the necessity of adopting a more dynamic approach to measuring living costs. The research advocates for the chained-Laspeyres method as a more adept tool for capturing the complexities introduced by changing consumption patterns during industrialization, economic growth, and improved incomes.
Read the article in full here: Horrell, S., ‘Household consumption patterns and the consumer price index, England, 1260–1869’, Economic History Review, 76 (2023), pp. 1023–1050.
