The Mars Bar Unit of Account

The fluctuating weight of the Mars Bar is quite a contentious issue here in the UK. Answering a query as to whether economists take this into account (and not just price fluctuations) when calculating inflation using the Retail Prices Index, economist Tim Harford offers some entertaining information regarding the Mars Bar unit of account.

The Mars Bar has been worthy of scrutiny ever since the late Nico Colchester noted in the Financial Times back in 1981 that it was a very stable unit of account. It is a veritable ingot of basic commodities (sugar, milk, cocoa) that has kept its value relative to the price of other goods such as small cars, which have cost about 20,000 Mars Bars for the past 70 years.

As Colchester wrote,

The Mars Bar […] is a long-established basket of staple commodities (cocoa, vegetable fats, milk solids, sugar) packaged with great consistency. […] As such it is a reliable unit of account certainly more reliable than gold, which is prone to speculation and it preserves a remarkably constant real value.

No mention of deep-fried Mars Bars, however.