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The Hidden Economics Lessons in Your Favorite Songs about Money

Wednesday, January 22, 2020

Compiled by Julie Bennett, RC Balaban, Andrew Spewak and Christine Smith of the St. Louis Fed

An astonishing number of songs focus on cash and consumerism.

Some describe the joy found in financial freedom or making it big—or just dreaming about it. Think Calloway’s “I Wanna Be Rich” or “Independent Women” by Destiny’s Child, for example. Others reject materialism or explain why riches won’t solve all your problems. See Ed Sheeran’s “Beautiful People,” “For the Love of Money” by the O’Jays, and so on.

But within the lyrics are deeper dissertations about markets, wealth, currency and finance. Here are the hidden economics lessons in five of our favorite songs about money.

Forget about the Price Tag … Remember the Price Index!

“Price Tag,” Jessie J | Lyrics from LyricFind

yellow price tag label

Everybody look to the left
Everybody look to the right
Can you feel that yeah
We're paying with love tonight

It's not about the money money money
We don't need your money money money
We just wanna make the world dance
Forget about the price tag

Most people know Jessie J’s song “Price Tag” to be a catchy 2011 hit that reminds us to look beyond material objects and find happiness in the people that surround us.

What many miss, however, is Jessie J’s truly intended lesson regarding the economic concept of inflation.

The lesson is in the line: “Forget about the price tag.” Because when it comes to gauging inflation, it’s not about the price tag of one individual item. Instead, inflation rates are measured by assessing the change in price for a representative market basket of goods and services.

This includes a variety of things—food, health care, energy, transportation—that reflect the purchases made by an average consumer. The overall price of this market basket is characterized by a price index, and the percentage change in the price index over time is reported as the inflation rate.

Two primary price indices are used to calculate U.S. inflation rates:

  1. The consumer price index (CPI)
  2. The personal consumption expenditures price index (PCE)

These two indices aim to measure the same thing, but they differ slightly in how they’re compiled. Therefore, the inflation rates reflected by each index vary. For example, in November 2019, headline PCE inflation (which includes food and energy) was about 1.5%, while headline CPI inflation was about 2%.

Despite Jessie J’s clever and insightful lesson regarding inflation calculation, she does get one thing a little off on the economics front: At this point in time, love is unfortunately not a valid alternative to cash, check or credit.

If You Had $1 Million, Would You in Fact Be Rich?

“If I Had $1,000,000,” Barenaked Ladies | Lyrics from LyricFind

adorable monkey

If I had a million dollars (if I had a million dollars)
Well I'd buy you a green dress (but not a real green dress, that's cruel)

If I had a million dollars (if I had a million dollars)
Well I'd buy you a monkey (haven't you always wanted a monkey?!)

If I had a million dollars (if I had a million dollars)
I'd be rich

The Barenaked Ladies seem like a generous band. Quite generous, in fact. After all, if they had $1 million, there are all sorts of things they would buy you.

Several questions come up, most notably: Could you afford to actually buy all the things the singers want to buy with $1 million? And after ringing up all those purchases, would you still be rich?

Now, a few rules before we get going. As The Knack told us, you can’t put a price on love, so that’s not in the final tally. Similarly, we can’t put a price on John Merrick’s remains, though it remains to be seen who would actually want all them crazy elephant bones.

First up is the big purchase: the house. As of the third quarter of 2019, the median price of houses sold in the U.S. was $310,900. That’s nearly one-third of the singers’ wealth right there. Then there’s the cost of furniture for the house (like a nice chesterfield or ottoman). This amount will depend on individual tastes and the home’s size, but we’ll ballpark it at $20,000. And then there’s the cost of the car. The Plymouth Reliant K is hard to find, but a quick search turns up models still out there for a few thousand dollars. We’ll call this one $2,000.

Similar to furnishing a house, a tree fort can cost relatively little or can be as expensive as a small house. In this case, the band is on the more expensive side if it’s a treehouse that can accommodate a fridge. We’ll call it $50,000 for the treehouse and another $150 for the mini-fridge.

The band will save money by opting for the fake fur coat over the real one. (And avoid being cruel.) That’ll run about $250. The exotic pet will cost a little more, with a llama running about $3,000.

Even though the band already bought a car, now it’s time for the limo to go to the store. They could buy one outright for about $60,000. There’s also the green dress; let’s budget $100.

Hopefully, the llama and the monkey will get along well. The monkey would run about $6,000.

For buying art, we’ll focus on a Picasso rather than Garfunkel. In 2013, a Picasso painting sold for $155 million, well outside the Barenaked Ladies’ price range. However, there are a number of lesser-known but more affordable works available for around $15,000.

The estimated total comes to $467,400, leaving the band with a little over half a million dollars. So, after all those purchases, would the band be rich? Remember, they’re buying all this stuff for someone else.

It really depends on how you measure being “rich.” According to the Fed’s Survey of Consumer Finances, the net worth of the median family (or the family right in the middle if you lined everyone up according to net worth) was $97,300 in 2016, so the band would certainly be wealthy by comparison. However, the mean (or average) net worth was $692,100, leaving the band below average.

Still, there are worse places to be, especially now that they can eat all the Kraft dinners they want.

Ari’s a Tastemaker, but also a Price Taker

“7 Rings,” Ariana Grande | Lyrics from LyricFind

seven diamond rings

My wrist, stop watchin', my neck is flossin'
Make big deposits, my gloss is poppin'
You like my hair? Gee, thanks, just bought it
I see it, I like it, I want it, I got it (yeah)

Whoever said money can’t solve your problems
Must not have had enough money to solve ’em

In 2019, Ariana became the first artist since the Beatles to hold the top three songs on the Billboard Hot 100. Her success has led to more than 172 million Instagram followers and, if the “big deposits” she mentions are any indication, likely about that many dollars in her bank account.

The Beatles sang that money “can’t buy me love”; Ari’s song posits that it’s bringing her happiness and solving her problems.

While the stans watching her every post have given Ariana a mega-influential social media presence, her wealth taken on its own does not necessarily give her any economic clout. Firms set prices based on supply and demand in the aggregate economy, not the actions of one individual, no matter how many Arianators she has.

Economists would call Ariana a price taker—the cost of red bottom shoes, diamond rings and anything else Ari’s tattooed heart desires stays constant regardless of her purchasing habits. As such, with more money Ariana can afford more of what she says she loves.

A Lesson on Currency from Johnny Cash

“Wrinkled, Crinkled, Wadded Dollar Bill,” Johnny Cash | Lyrics from LyricFind

wrinkled and crumpled dollar

Lake Michigan wind sure is cold
And I need me a jacket for my shoulders
I could buy one down at the surplus store
Cheap cotton twill
With my wrinkled, crinkled, wadded dollar bill
But I'm not bound
And I never will
Be to a wrinkled, crinkled, wadded dollar bill

The Man in Black’s recording of this Vince Matthews song is heartbreaking. Hungry and cold, a man down on his luck imagines how he could spend his bottom dollar before defiantly tossing it into Lake Michigan.

Aptly, Mr. Cash also teaches us about the lifecycle of cash.

That wrinkled, crinkled dollar was a Federal Reserve note, so named because the central bank’s Board of Governors is the issuing authority for paper currency. For fiscal year 2020, the Fed has ordered 5.2 billion new notes from the Bureau of Engraving and Printing. Some 1.5 billion of these will be $1 bills. (Note that while the Fed orders currency and influences the money supply, it doesn’t actually print money.)

Before chucking that buck into Lake Michigan, Johnny pondered using it to buy a jacket. Anyone can purchase goods and services with a dollar bill because it’s fiat money. This differs from commodity money such as gold or grain, considered “intrinsically valuable.” Yet it’s legal tender for all debts public and private and backed by the U.S. government.

That’s worth mentioning because, not long after this song appeared on the 1970 album, “Hello, I’m Johnny Cash,” the international monetary system saw big changes. Under the Bretton Woods system, the dollar had been an international reserve currency backed by gold. But President Richard Nixon ended convertibility of U.S. dollars to gold in 1971 and, today, most currencies are fiat.

So, what about the waterlogged dollar? Could you still use it after it took a bath in Lake Michigan? Made of 75% cotton and 25% linen, the estimated lifespan of a $1 bill is about 6 years with normal wear and tear. But before Cash discarded it, we know this dollar was already wrinkled, crinkled and wadded.

Money that’s too worn, limp or dirty may fit the Fed’s definition of unfit currency.

My House in Budapest Is an Illiquid Asset

“Budapest,” George Ezra | Lyrics from LyricFind

a golden grand piano

My house in Budapest
My hidden treasure chest
Golden grand piano
My beautiful Castillo
Oh, for you
I'd leave it all

Obviously, that George would leave behind such valuable assets proves he truly is in love with the object of this song. Upholding the worth of these items is the fact they each derive their value from multiple sources.

For example, the hidden treasure chest is likely full of doubloons and provides a fun adventure for those who seek to uncover it. Fellow musicians will want George’s golden grand piano for its ability to produce euphonious notes, and investors may want it for the way gold is a store of wealth.

Leaving everything behind may not be as simple as it sounds, though. George’s asset portfolio is illiquid. He can’t just go to the bank and trade his belongings in for their cash value on a whim.

For the Castillo (an old-fashioned word for “castle”), he’ll have to go through the painstaking pile of paperwork known as the real estate market. For the treasure chest, he’ll need to take the time to write detailed instructions on how to find it.

And don’t get started on the piano—it’s hard enough to find movers who can carry a regular piano, let alone ones willing to bear responsibility for the world’s fanciest piano in case something might happen to it (like an unfortunate slip down the stairwell of the aforementioned Castillo).

While George may have trouble recuperating the full value of his assets on such short notice, and he’s never getting back the time and effort he spent hunting down these artifacts, he’s not the kind of person to let sunk cost get in the way of romance.

The surest sign of love is that George would go through these major inconveniences for the one he calls “baby.”

Additional Resources

Tagged julie bennettrc balabanandrew spewakchristine smithinflationprice indexwealthnet worthconsumerspendinghousingcashcurrencysunk costllama