Measuring the force of technological progress and tracking where the abundance goes.
Technology creates exponential deflation. Computing power that cost millions now costs pennies. Communication that was expensive is now free. Energy and transportation costs have collapsed. This should have made everyone dramatically wealthier.
Instead, consumer prices rose. The gap between what technology delivered and what consumers experienced represents a redistribution of productivity gains—technological abundance that disproportionately accrued to asset holders rather than flowing to consumers as lower prices.
This is not a theory. It is measurement. Every data point is sourced, every formula is verifiable, every calculation is transparent. We built the index to provide an objective foundation for understanding how technological progress interacts with monetary policy—and who captures the gains.
Technology makes things cheaper. Money printing makes things expensive. What wins?
For decades, these two forces—technological deflation and monetary expansion—have moved in opposite directions. Technology pushes costs down through exponential improvement. Monetary policy expands the money supply to maintain "price stability."
The mathematics reveal a systematic divergence. Technological gains reduce costs. Monetary policy prevents those reductions from reaching consumers. The productivity concentrates—into asset prices, intermediaries, and complexity costs—rather than flowing to consumers through lower prices.
The Deflation Index quantifies this mechanism.
Rigorous methodology: We track cost-per-performance metrics ($/GFLOPS, $/GB, $/kWh, $/kWh battery) across four sectors, weighted by economic importance. The Master Deflation Index is calculated using a geometric mean to properly capture compounding effects.
Complete transparency: All data, formulas, and source citations are public on GitHub. 700+ verified formulas. 400+ data points. 35 years of coverage (1990-2024). Anyone can download the Excel files, verify every calculation, and reproduce the results.
Authoritative sources: Federal Reserve (M2), Bureau of Labor Statistics (CPI), IRENA (solar), BloombergNEF (batteries), DOE (energy), FCC (communications), AI Impacts (computing). Average source reliability: 92/100 (A-grade).
Conservative estimates: Where uncertainty exists, we choose the more conservative assumption. The true technological deflation is likely higher than we measure. This index understates the gap, not overstates it.
We track data, not narratives. The index captures systematic patterns across decades—not cherry-picked examples or anecdotes. If the numbers change, we change the conclusion. Precision over persuasion.
Every source is cited. Every formula is visible. Every assumption is documented. Trust comes from verification, not credentials. Anyone can download the data, check the calculations, and challenge the work.
We describe mechanisms, not motives. Monetary policy is a counterforce to technological deflation—that's an observable pattern, not a judgment. The system can be measured without being moralized. Let the data speak.
The research is public. The data is accessible. We encourage academic use, journalistic citation, policy analysis, and critical scrutiny. Knowledge compounds when shared. This work improves through collaboration, not defensiveness.
The Deflation Index should become the standard measure for tracking technological progress and its economic distribution.
Just as CPI measures consumer inflation, the DI should measure technological deflation—and the gap between them should inform monetary policy, investment strategy, and political economy.
Why this matters: Technology is the primary driver of human prosperity. Understanding where those gains flow—to consumers, to capital holders, to asset prices, to complexity costs—is essential for economic policy and social equity.
What we're building: The infrastructure for rigorous, transparent measurement. Clean data. Robust methodology. Open documentation. Collaborative refinement. A foundation for understanding the economics of technological progress.
This work will expand to additional sectors, improve with better data, and evolve through critical feedback. The index is never finished—but it's built to compound over time.
The Deflation Index is an independent analytical initiative combining economics, data science, and systems thinking. We're a small team committed to rigorous analysis and transparent methodology.
Current focus: Building the most comprehensive, verifiable measure of technological deflation available. Ensuring every number is defensible, every source is credible, and every conclusion follows from the data.
We're looking for:
Interested? Email us at [email protected]
The Deflation Index is built on transparency. The data is public, the methodology is documented, and the work benefits from scrutiny.