When is a rose no longer a rose? When is an apple an orange? If you used the internet in 1996, and use it today, is the experience so qualitiatively different that we are talking two different things?
That is the practical implication of changes in product quality over time, known by economists as hedonic change.
“Hedonic” changes are hard to quantify, but are crucial in the internet and computing businesses, as improvements in product quality are assumed to exist as a routine and fundamental matter.
A dial-up internet access product is not the same as a gigabit internet connection. A mobile phone or personal computer that is 20 years old is arguably not the same product as a top of the line device in 2022.
The same applies to application experiences. Amazon.com offers an experience which arguably is different from a character-only bulletin board of 1990. So does Uber or Google Maps.
Hedonic adjustments--not to mention indexing for inflation--is crucial for evaluating home broadband as well. Price is one matter; quality (speed, for example) another matter.
One analysis of home broadband prices using hedonic adjustment showed that speed and price both varied across countries in the Organization for Economic Cooperation and Development in 2016.
The point is that comparing typical prices has to be qualified by typical speed (and currency differences). A 25-Mbps service in one country and a 800-Mbps service offered at the same currency-adjusted price in another country might arguably represent different products, values and “real” prices when evaluating both quality and quantity.
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