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Wednesday, June 18, 2008

People Bought Video Games With Their Stimulus Checks

Did you buy video games with your stimulus check from Uncle Sam? Join the crowd. The IRS mailed the first stimulus checks on May 2nd and by May 6th video game resale prices started increasing. Just enough time for people to cash their checks and choose their games.

The chart below shows the average resale video game price for 2007 and 2008 (The average includes more than 5,000 video games from every console from NES to Xbox 360). The prices shown are an indexed price starting at 1 so you can see the relative price change easier. Because video games drop in price, for the most part, the actual 2007 average price is higher than 2008 average price.

Video Game Prices April 17th to June 16th - 2007 vs 2008


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Zoomed in Game Price Data for May


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The prices in April 2007 and 2008 followed almost the exact same pattern in price depreciation, but starting May 6th the prices diverge. 2008 prices start increasing while 2007 continues to decrease. The gap continues to widen until May 22nd, six days after the last stimulus check arrived. The difference in prices has slowly shrunk ever since.

This tells us a few things about the stimulus checks and video games:
  1. Some people bought used video games with their checks.
  2. People didn't wait very long to start spending the checks
  3. The stimulus looks to be only temporary. The prices are slowly going back to the prices they would have been without the checks.

It will be interesting to see when the prices actually do converge again and how long the stimulus actually lasts. I'll have to run another analysis later this summer to find out.

Average video game prices came from VGPC.com

7 comments :

TanookiTravis said...

This is a great find. I wonder well this chart represents the chart for the entire economy. I would imagine it is fairly close, but then again, the video game industry as a whole has appeared to be quite recession-proof thus far. It will be interesting to see how long the increase lasts.

Good stuff.

Sam said...

How does Wii Fit fit into this?

JJ Hendricks said...

Sam, not sure what you mean "how does WiiFit fit into this?" I'm sure some people bought WiiFit with their stimulus checks too, but the analysis I was doing was looking at used video games and their resale prices.

benw said...

I would be willing to guess that the jump in game sales in 2008 had a lot more to do with the release of Grand Theft Auto IV on the 29th of April than it did with stimulus checks arriving.

Do some research - GTAIV was the largest video game release of ALL TIME (and debateably the largest entertainment IP release).

Anonymous said...

I don't think GTA IV's release matters. This is resell. A used GTA copy wouldn't sell for more than a new copy.

Doug said...

Ok, I see the correlation, but I don't see the causality. Any evidence that the ones receiving the rebate checks are the ones buying the games? Any evidence that the video game price jump was any greater than the average good for the same time period?

Could it be that it's the end of the school year, and students are looking for something to do with their free time now that summer is upon us? Most colleges are getting out around the first week of May.

JJ Hendricks said...

Doug. Thanks for the questions.

The reason I showed the prices from last May compared to this May is to help eliminate some of those other factors you mentioned. Last May school got out and summer started but prices continued dropping (the red line). Seasonality wise, everything is the same this year but prices increased.

My claim is that it is related to the stimulus checks because the boost happened so soon afterwards.

It could be caused by other factors, but with the April prices matching almost exactly and then the prices diverging less than a week after the checks are mailed makes me think the stimulus checks are the cause.

Regarding your question:
"Any evidence that the video game price jump was any greater than the average good for the same time period?"
- I don't claim people only bought video games with their checks or bought video games more than other goods. I am trying to show that the stimulus checks had a boost on the video game market. My guess is other products would show similar boosts in price, but I don't have any data about that.

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