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Looks like the Tooth Fairy is generous this year, buying at an ATH of $4.70 per tooth
Parents were surveyed to find out how much their kids received under their pillows. The tooth price has risen faster than inflation since 1998, but the average under-pillow payout trend is a surprisingly reliable indicator of the S&P 500. The survey shows tooth price with an upward growth of 17% whilst the S&P 500 has a 19% increase.
Tooth Inflation Rate:
In 2017, the Tooth Fairy paid out $271 million across the US. The US inflation rate is 2% whilst the tooth inflation rate is a whopping 10%. The tooth inflation rate should follow the rate of a “basket of goods”, but it doesn’t. Even if the “basket of goods” consists of kids’ stuff like toys & candy, the high tooth inflation rate shouldn’t happen, as toys & candy are cheaper to manufacture now. So why does it happen? It could be due to Income Elasticity of Demand. Let’s say your income doubles, it doesn’t necessarily mean you double the spending on groceries, but you might splurge on other aspects – your kids. Creating treasured memories for children is the aspect that drives up the price.
It may be tough times for the Tooth Fairy, but for the children, the price is justified. Who knew that a light-hearted tradition to teach kids about dental hygiene would also teach us a bit about economics?
Bonus Fact: 🐌
Snails have the most teeth (approx. 14,000). I wonder how their Tooth Fairy is doing 🤔
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