Naked Statistics: Stripping the Dread from the Data

by Charles Wheelan

Hollywood studios may be the most egregiously oblivious to the distortions caused by inflation when comparing figures at different points in time—and deliberately so. What were the top five highest-grossing films (domestic) of all time as of 2011?5 1. Avatar (2009) 2. Titanic (1997) 3. The Dark Knight (2008) 4. Star Wars Episode IV (1977) 5. Shrek 2 (2004) Now you may feel that list looks a little suspect. These were successful films—but Shrek 2? Was that really a greater commercial success than Gone with the Wind? The Godfather? Jaws? No, no, and no. Hollywood likes to make each blockbuster look bigger and more successful than the last. One way to do that would be to quote box office receipts in Indian rupees, which would inspire headlines such as the following: “Harry Potter Breaks Box Office Record with Weekend Receipts of 1.3 Trillion!” But even the most dim-witted moviegoers would be suspicious of figures that are large only because they are quoted in a currency with relatively little purchasing power. Instead, Hollywood studios (and the journalists who report on them) merely use nominal figures, which makes recent movies look successful largely because ticket prices are higher now than they were ten, twenty, or fifty years ago. (When Gone with the Wind came out in 1939, a ticket cost somewhere in the range of $.50.) The most accurate way to compare commercial success over time would be to adjust ticket receipts for inflation. Earning $100 million in 1939 is a lot mor...