This Is What Happened to the Price of Nails Over the Last 330 Years

Tracy Alloway (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:16)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

So Joe, we have been recording a lot of supply chain episodes. And I know we kind of joke about this, about going as granular as possible into the supply chain.

But I think I finally found basically as micro as we might possibly go.

Joe Weisenthal (0:38)

This is what I love.

There's always more micro. Every little part has a sub part or a sub factor. But yes, I believe our conversation today is going to get very micro. But is it like a supply chain episode for real?

Tracy Alloway (0:54)

Yeah, I think it kind of is. I mean, this is a component that feeds into lots of different things. And also you say that things can always get more micro and there must be a limit somewhere unless we get into like subatomic particles or something like that. I really feel like in terms of components No, that's true. that feed into a lot of other things, this is maybe as micro as we're gonna get.

We are going to be talking about nails today, like nails that you hammer and that go into things like housing and construction.

Joe Weisenthal (1:26)

There's no sub, a nail isn't contained one part. There's no like, you know, obviously there are elements to build, there's the raw metal and the labor, but yeah, a nail is about as simple as a part you could get.

Tracy Alloway (1:41)

Yeah, well, I'm glad you mentioned that because this is something that is kind of unique to nails. So nails are something that have existed for a very, very long time, although in different forms.

But that means that they're very, very interesting to study from an economic perspective. And you can learn a lot about how the economy has changed over time by looking at nails. And so we are going to be speaking with someone who has done exactly that, someone who actually wrote a paper basically constructing a price index of nails from I think it was 1695 to modern times and trying to learn what price changes in nails actually says about the transformation of the economy. So very interesting stuff, very micro stuff.

Joe Weisenthal (2:29)

So let's get right to it. But I just want to say, I hope one thing, that we've had this inflation lately, and I wouldn't be surprised if nails have gotten more expensive. But I really hope that as a society, we're paying less for nails on a sort of like, purchasing power adjusted or dollar adjusted average than we were in 1695 I hope we've seen some efficiency gains even with the inflation. I guess we're about to find out.

But that is my one, I'll be really sad if we're back worse than we were like over 300 years ago.

Tracy Alloway (3:02)

You're gonna go back to forging your own nails or something in protest.

Joe Weisenthal (3:05)

Exactly right.

Tracy Alloway (3:06)

All right, well, we're about to find out. We're gonna be speaking with Dan Sichel. He's a professor of economics at Wellesley College. Also used to be on the Federal Reserve Board in DC and also at the Treasury Department. So very interesting background. Dan, thank you so much for coming on the show.

Dan Sichel (3:24)

Very happy to be with you. Delighted to get a chance to talk nails.

Tracy Alloway (3:28)

Excellent.

I wanna start out with a very important question. When should you use nails and when should you use screws?

Dan Sichel (3:39)

Great question. So nails are a lot easier and quicker to install than a screw. So if you're just putting two pieces of wood together, a nail might be a good way to do it. But screws have a lot more holding power that is the resistance to the pieces you put together being pulled apart.

And screws work in a much wider range of materials than nails do.

Joe Weisenthal (4:04)

I'm trying to work in like a, if all you have is a hammer joke, everything looks like a nail. I haven't come up with it yet. My goal though is by the end of the episode. So before we actually talk about the study of nails, why don't we just zoom out a bit?

What is it that your work has focused on more broadly such that trying to construct the price history of nails was a endeavor that you wanted to do?

Dan Sichel (4:31)

So I'm a macro economist and as Tracy mentioned, spent many years working at the Federal Reserve Board doing economic forecasting.