Journalism Basics: Adjusting for inflation

Arielle Levin Becker is a very talented reporter who covers healthcare for the Connecticut Mirror. A few days ago she Tweeted:

Re: maternity costs: My mom was quoted $1,100 to deliver me. 30 yrs later, I was quoted $10-15k. Billed to insurance in both cases.

That’s a huge difference, and it speaks to how the medical business changed. But is it a fair comparison? Hasn’t the value of money changed?

Making sure that we’re comparing apples to apples should be a requirement for journalists. We do it automatically when someone talks about distance in metrics (“We think the bad guys are out there about 30 meters [about 33 yards]”, the colonel said.). But we don’t always do it when we talk about money. And it’s something that we should because the conversions can also be illuminating.

Step 1: Figure out the numbers you’re comparing.  Here, it’s $1,100 and $12,500 (we’ll use the middle number of Becker’s Tweet and we’ll assume she’s about my age).

Step 2: Go to the U.S. Department of Labor’s Bureau of Labor Statistics Consumer Price Index calculator, which uses the federal government’s inflation calculations.

Step 3: Put in your data. We want apples to apples and we live in 2013. So if we want to make the statement “The same procedure that cost Arielle’s mom $1,100 in 1972 would cost  about $6,130 in today’s dollars,” we fill in the original amount and “1972.” If we want to say “Today’s $12,500 price tag is comparable to about $2,200 in 1972,” then we’d put $12,500 in the amount box and work it backwards that way.

The two different ways of looking at the numbers give us two different angles:

  1. The first example lets us look at the rising cost of health care.
  2. The second lets us look at inflation.