Freakonomics: prices of used bikes and cars inversely correlated

Well, that thread title should put off uninterested parties.

So, an interesting post on the Freakonomics blog:
http://freakonomics.blogs.nytimes.com/2009/08/17/bicycle-inflation-in-paradise

After being surprised at the price of a used bicycle, Robin Goldstein takes a (very brief) look at prices of used cars and prices of used bikes in some US cities, finding a negative correlation.

I wonder if the correlation is genuine. More striking, to me, is that the cost of a bicycle is deemed outrageously high, despite being on average 4% of that of a car. When used as a vehicle for commuting and everyday general use, it seems pretty clear that an investment in a quality bike will pay dividends. Indeed, that could be a driving factor in the market price of 2nd hand bikes - where journeys by bicycle are more common, the price of a bike may be higher, not because demand is higher, but because people value a quality bicycle higer (witness the poor sales of $200 BSOs in Portland).

Anyway, don't have the time to think too much further, but struck me as interesting. What are your thoughts..?

My thoughts are currently focused on raisins and green tea.

Freakonomics (book) is an interesting read though, reccommmended.

I haven't read the article but an old car will cost a lot to repair when it goes wrong and that risk affects the price of the car but the bike will hold its price once it reaches a certain level. A classic bike like a classic car it may rise in price in certain markets.

True, but the author is looking more at run-of-the-mill 2nd hand bikes, not collectables:

Yeah, the bike guy answered, he had something super-cheap for me, an old road bike that they’d fixed up. It wasn’t exactly my size, but it would do. It was a 1991 model, a Trek, I think. It was in good working condition, it had some newer components, and it came with a warranty. I could have it, he said, for $475.

The thing with most cars over 15 years old is, there comes a time where they have a negative value. No matter how many tens of thousands it cost new, no one wants some big old fuel guzzler. Cars are more difficult to understand (mechanics) and to store, so used cars are indimidating for that reason, people concerned about huge maintenance cost/problems when they could just buy a new one. Quite rapidly cars become worth more in scrap metal than as a vehicle.

Buying new cars is very much a culture engrained in this country. Most people dont drive things more than 10 years old, and in most places youll see a large quota of this years models.

In the rest of europe (well ive been to italy & spain) it seems most people drive cars 12+years old. And quite common to see 20 year old bog standard bottom of the range cars still being maintained & used fully.

I think the value & disposability of vehicles is largely cultural.