“The Price of Nails Since 1700: Even Simple Products Experienced Large Price Declines”, 2017-04 (; similar):
Many products—such as lighting and computing—have undergone revolutionary changes since the beginning of the industrial revolution. This paper considers the opposite end of the spectrum of product change, focusing on nails.
Nails are a simple, everyday product whose form has changed relatively little over the last three centuries, and this paper constructs a continuous, constant-quality price index for nails since 1695.
These data indicate that the price of nails fell substantially relative to an overall basket of consumption goods as reflected in the CPI, with the preferred index falling by a factor of about 15× from the mid 1700s to the mid 1900s. While these declines were nowhere near as rapid as those for lighting and computing, they were still quite sizable and large enough to enable the development of other products and processes and contribute to downstream changes in patterns of economic activity. Moreover, with the relative price of nails having been so much higher in an earlier period, nails played a much more important role in economic activity in an earlier period than they do now.
[A not yet completed section of the paper will use a growth accounting framework to assess the proximate sources of the change in the price of nails.]