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<p>[QUOTE="Cringely, post: 1240114, member: 22271"]Any grading scale (100 point, 70 point 5 star hotels, 3 star Michelin restaurants, etc.) is arbitrary. Hopefully, the scale represents some sort of relationship between the grade and the item being described. What Sheldon observed more than 60 years ago was a relationship between descriptive (adjectival) quality (grade) and price in large cents. Since the best condition (most expensive) large cents were selling for 70 times that of the worst condition, the grading scale became a 70 point scale.</p><p><br /></p><p>When Sheldon invented the 70 point scale, the relative price of a given large cent was linearly proportional to its numeric grade. Unfortunately, the linear relationship didn't last. As it turns out, there still is a mathematical relationship that relates pricing to grade. Rather than linear with numeric grade, it is exponential (constant percentage increase) per adjectival grade increase with the ten full adjectival grades being G (1st), VG (2nd), F (3rd), VF (4th), EF (5th), AU (6th), MS60 (7th), MS63 (8th), MS64 (9th) & MS65 (10th). For a given coin costing X dollars, the next higher grade should cost 1.75X dollars (assuming a 75% exponential relationship).</p><p><br /></p><p>Aha, you say that that is not true,and you trot out the Red Book showing a counter example where the relationship between grades is more that 2X or only 1.1X. My thesis is based on typical behavior of most coins (some will have larger increases, some will have smaller increases). On average, you will find that the relationship is (and has been) typically a 75% increase in price for every increase in adjectival grade. Details will be published in a forthcoming article “Price Trends of U.S. Coins” that I wrote for <i>The American Journal of Numismatics</i> and which will be published later this year.[/QUOTE]</p><p><br /></p>
[QUOTE="Cringely, post: 1240114, member: 22271"]Any grading scale (100 point, 70 point 5 star hotels, 3 star Michelin restaurants, etc.) is arbitrary. Hopefully, the scale represents some sort of relationship between the grade and the item being described. What Sheldon observed more than 60 years ago was a relationship between descriptive (adjectival) quality (grade) and price in large cents. Since the best condition (most expensive) large cents were selling for 70 times that of the worst condition, the grading scale became a 70 point scale. When Sheldon invented the 70 point scale, the relative price of a given large cent was linearly proportional to its numeric grade. Unfortunately, the linear relationship didn't last. As it turns out, there still is a mathematical relationship that relates pricing to grade. Rather than linear with numeric grade, it is exponential (constant percentage increase) per adjectival grade increase with the ten full adjectival grades being G (1st), VG (2nd), F (3rd), VF (4th), EF (5th), AU (6th), MS60 (7th), MS63 (8th), MS64 (9th) & MS65 (10th). For a given coin costing X dollars, the next higher grade should cost 1.75X dollars (assuming a 75% exponential relationship). Aha, you say that that is not true,and you trot out the Red Book showing a counter example where the relationship between grades is more that 2X or only 1.1X. My thesis is based on typical behavior of most coins (some will have larger increases, some will have smaller increases). On average, you will find that the relationship is (and has been) typically a 75% increase in price for every increase in adjectival grade. Details will be published in a forthcoming article “Price Trends of U.S. Coins” that I wrote for [I]The American Journal of Numismatics[/I] and which will be published later this year.[/QUOTE]
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