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Friday, August 14, 2009

Who Wants to be a Thousandaire?

"Who Wants to be a Millionaire?" has returned to primetime, with Regis Philbin. The top prize is still $1M.

In August 1999, the price of gold was $255/ounce. When I wrote this draft, the price of gold was $940/ounce. That is an inflation rate of 268% over ten years, an annualized inflation rate of 14%. That isn't entirely an accurate measure of inflation, because the rate of increase in the price of gold has accelerated over the past few years. In August 2004, the price of gold was $400/ounce. That corresponds to 135% inflation over five years, an annualized rate of 18.6%.

In August 1999, $1M was worth 3922 ounces of gold. In August 2009, $1M is worth 1064 ounces of gold.

Adjusting for inflation correctly, $1M in 1999 is the equivalent of $271k in 2009. In order to have a properly inflation-adjusted payout, the top prize should be $3.7M.

Many game shows and reality shows offer $1M as their top prize now. Adjusting for inflation, $1M is much less than it used to be. If a reality show doesn't increase its grand prize, then it's like the contestants get a pay cut each year, compared to the previous year.

I'm surprised that they didn't stick with a $10M top prize like in "Super Millionaire". Then, it's a bigger prize than it used to be, adjusting for inflation. The producers of the show are probably spending more on Regis Philbin's salary, than they are on prize money.

$1M is a lot of money, but it isn't so much that the winner can retire. Due to inflation, a game show needs to offer at least $3.7M to be the equivalent of $1M in 1999.

1 comment:

David_Z said...

$1M isn't enough to retire? Maybe not, but As long as you don't go wild buying boats and cars with the $600k (net taxes) it's enough to pay off all your debts (housing, student loans, cars, etc.) and have some left over, for most people. If you don't change your consumption, you can save/invest the remainder, and quit your rat-race job.

I estimate that I could live quite comfortably working part time for minimum wage, if I didn't have all those other bills to pay. And that would make practical agorism more attainable.

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