Was Adam Smith Right About Watches?

In a recent article in the Quarterly Journal of Economics, UCD economists Cormac O’Grada and Morgan Kelly re-examine a well-known claim by the founder of Economics, Adam Smith.

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‌“Although largely absent from modern accounts of the Industrial Revolution, watches were the first mass-produced consumer durable and were Adam Smith’s preeminent example of technological progress. In fact, Smith makes the notable claim that watch prices may have fallen by up to 95% over the preceding century, a claim that this article attempts to evaluate. We look at changes in the reported value of over 3,200 stolen watches from criminal trials in the Old Bailey in London from 1685 to 1810. Before allowing for quality improvements, we find that the real price of watches in nearly all categories falls steadily by 1.3% a year, equivalent to a fall of 75% over a century, showing that sustained innovation in the production of a highly complex artifact had already appeared in one important sector of the British economy by the early eighteenth century.”

You can read the journal article here and an ungated working paper version of the paper here.

At UCD, Morgan Kelly teaches Statistics and Economic History to undergraduate students and Macroeconomics to MSc students.

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