Skyhigh or Skyfall?

Skyfall, the 2012 James Bond blockbuster hit the $1 billion milestone recently making it the highest grossing 007 movie of all time. The ten top-grossing James Bond films are below (click on images for a closer view).

 

 
Clearly the headline jumps out at you that is Skyfall is top of the list, therefore it must be the most popular movie to date in the series. Of course, that would perhaps be more accurately measured by how many people actually went to see the screening? Even that idea is at fault as shouldn’t it be measured by the actual percentage of the population who viewed it? I believe that prize goes to Gone With the Wind, which apparently is also the highest grossing movie in inflation-adjusted terms as well.

 

 
But my aim here is not to discuss the merits of any film relative to others or even the changing fashions of visiting the cinema. I am only interested in the trend towards higher and higher grossing figures which is surely just a monetary phenomenon.

 
The beauty of measuring this increase is in the simplicity of the very act itself. Going to the cinema in 2012 is very similar to going to the cinema in 1975. Choose a film; drive, ride, walk to cinema; buy ticket; buy popcorn, buy coke-cola; sit in dark room, watch movie; go home. Simples! The only difference is the price you pay (click on images for a closer view).
 
The charts below show you what you are paying for this increasing privilege.

 

 
This steadily rising gross takings index must be determined by population growth and the actual cost of going to the cinema. When you measure ‘The James Bond Index’ vs the official Consumer Price Index (CPI), it is clear that for this standard homogenised “product”, the implied rate is closer to 7%, substantially higher than CPI (currently 2.7% for UK, 1.7% for the US).

 
While this will come as absolutely no surprise to anyone who lives in the real world (of course this doesn’t include any politicians, economists or central bank policymakers ), this is just another example of rapidly inflating costs of living far greater than is reported. The crux of the issue is that we do not have to hedonically adjust a standard product across time (think a computer with 1 grizzillion bytes memory, or even 2 grizzillion), or substitute in a far inferior product (think a sofa made in China that is highly inflammable) to get a lower theoretical inflation rate.

 
All other things being equal, your inflation rate is 7%, no matter what policymakers want you to believe.

 
I wonder what odds the bookmaker William Hill will give me on the 2022 James Bond spectacular, “Die Another Hyperinflationary Day” being the highest grossing movie at $2 billion?!

 
 

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