Tuesday, October 23, 2007

What Price A Stamp?

So stamp prices are going up again. And by "going" I mean "went, like 5 months ago". The wheels of Project Potpourri grind slowly, but they grind exceedingly fine.

Now they have a Forever Stamp. You buy it today and it will be good until the end of time regardless of future price increases. Sounds like a great way to save literally hundreds of cents, right? My wife (or maybe it was me--these human details are so much dross) posed this question: If I buy a 41 cent Forever Stamp in 2007, am I really saving money vs a 53 cent stamp in 2020 or does it come out in the inflationary wash?

IIRC, inflation is something like 3% per year, but of course we don't have the information on what future stamp prices are going to be. What about history? How closely have stamp prices tracked inflation in the past? Using a history of stamp prices and relative dollar values since 1913 I was able to answer this question. (Notes: All this is based on the first ounce only. I didn't try to go back farther than 1913. For each year, I only use the average dollar value for the year, I didn't break it down by month. For years with more than one price increase, I only report the last one. Since 2007 isn't over yet, I used the last dollar value available, which is September.)

YearApparent price that yearStamp price in 2007 dollars% diff relative to today

It used to fluctuate quite a bit, but for almost the last 30 years, they've been within a few percents of the same price. And given that even a 10% difference is only $.04, I'd call it fairly constant over the last 100 years (except for a few years).


  1. I've wondered about this too.

    In my case (laziness), I think the forever stamp is worth it just for the convenience factor. Also, I'm the kind of person who, when the postage rates change, will use two full-price stamps instead of buying the 1 or 2 cent stamps.

    I'm sure the postal service would rather we buy up all the forever stamps today, so they can go ahead and spend the money. Then, they will let 2020 worry about itself.

  2. I was thinking it was more convenient to NOT buy the stamp, because then you don't have to hunt around for them 10 years from now. But you are right, if you send letters fairly often, it's actually more convenient to not have to find a 1 or 2 cent stamp.

    Also, they look cleaner since they don't have the price printed on them.

  3. There are additional factors here.

    Like say - what if some company invents some revolutionary replacement for the stamp. Or those blokes over at Google might invent some way for you to mail your crap through the Internet. Or your house could burn down taking your cache of forever stamps down with it. Or the Germans could try to take over the world again only instead of losing, like they usually do, they could actually WIN and they could then send out a proclamation stating the forever stamp is kaput and you need to buy the new ReichStamp to send letters.

    Well, you get the idea, it's just too risky a proposition. No sir, I'm sticking with the traditional analog stamp.

  4. Tessie: Oh, also: I'm the kind of person who, if I ever sent letters or even thought to buy envelopes or stamps, would put N stamps of whatever random values on until I thought it would go through.

    Jack: Another thing I didn't take into account is what year Daylight Saving went into effect. That's an additional 1 hour per day from the time we spring forward to the time we fall back, which effectively adds more time for inflation to work during those years (minus the difference for leap years). That could well explain the larger variation of stamp prices in the early years of the 20th century.

    Anyway, back to your comment: Another potential spoiler for mail would be if there were some electronic means of directly talking to someone at a great distance. Of course, such a remote-speaking invention would probably be very expensive in the initial years, so by the time it was affordable you might have used up your Forever Stamps.

  5. This is awesome.

    It's weird that it went down a cent in 1919, then back up the next year.

  6. It went down in 1919 because WWI was over. 1932 isn't exactly "the next year" from that.

  7. You really have to take into account the discount rate, because you won't be earning interest on the liquid capital you tie up in forever stamps. If it's priced correctly then you should come out slightly ahead with the forever stamps, because they're compensating you for giving up some flexibility.

  8. On the other hand, my liquid capital is otherwise tied up in Netflix rentals and jellybeans, so maybe not.

  9. Sure, but you get to watch movies and eat jellybeans sooner than you would if you'd sunk more money into stamps.

    Also, I do not understand the non-denominational stamps. Why do they denominate any of them? Right now you can even get the basic American flag design in both plain and 41-cent denominated versions, for 41 cents! Huh?

  10. I thought they were denominized so you could tell what value they were. (Otherwise how can you tell a $.02 flower stamp from a $.41 one? For that matter, how does the USPS tell them apart? Magnetic ink?) Thus the forever stamp having no denomination because it doesn't matter what you paid for it, it's still good.

    Google did not reveal an immediate answer, but did locate a graph as well as an idea: "...stamps [are] at their biggest bargain just before the rates [go] up.
    In other words, when the “forever” stamp goes into effect, buying a bunch of stamps just before a rate increase is a very effective way to save money."

    I don't know about "very effective", but food for thought.

  11. i saqw your comment at corporate-casual and i came here. my girlfriend and i had this convo the other day - i was like, "i think prices have doubled since about 83 or so. (Close!) like take the US stamp for instance, tha's a good bellwether.." god i'm smart. even though i was BSin' it.