The Price of Stamps: An
Excel Exploration
By Sharon K. OÕKelley
This
is a basic exploration looking at how EXCEL can be used to do a regression and
to make a prediction. The data set is based on the first class letter postage
for the US Mail from 1919 to 2002.
year 
rate(in cents) 


1919 
2 
1932 
3 
1958 
4 
1963 
5 
1968 
6 
1971 
8 
1974 
10 
1975 
13 
1978 
15 
1981 
20 
1985 
22 
1988 
25 
1991 
29 
1994 
32 
1997 
33 
1999 
34 
2002 
37 
If we
plot the data using EXCEL, the following graph is producedÉ.
From
the graph, it looks like we can predict that this would either be an
exponential function or a power function. Using EXCEL, I can perform a
regression analysis to determine which one is the better predictor of the data
trend.
Exponential:
Power:
The trendline is most reliable
when the Rsquared value is close to 1. In both of the instances above,
Rsquare is close to 1, but the exponential function has a higher value,
therefore, it is a betterfitting trendline of the two.
The exponential function yields
the following tableÉ.
Year 
Rate(Cents) 
1919 
1.220172121 
1932 
2.044374615 
1958 
5.739039898 
1963 
6.999172524 
1968 
8.535995025 
1971 
9.615649536 
1974 
10.83186151 
1975 
11.2705365 
1978 
12.69606282 
1981 
14.30189336 
1985 
16.7632993 
1988 
18.88356432 
1991 
21.2720059 
1994 
23.96254368 
1997 
26.99338757 
1999 
29.22404798 
2002 
32.92038041 
These values are somewhat close
to the original table.
Predictions
1.
When will the cost of a first class postage stamp reach $0.64 and $1.00?
Extending the table providesÉ.
2019 
64.65024735 
2020 
67.26849042 
2021 
69.99276861 
2022 
72.8273762 
2023 
75.77678136 
2024 
78.84563323 
2025 
82.03876924 
2026 
85.36122272 
2027 
88.81823084 
2028 
92.41524287 
2029 
96.15792878 
2030 
100.0521881 
Therefore, according to this
model, the stamp will cost a $0.64 around year 2019 and $1.00 around 2030.
3. How
soon should we expect the next 3 cent increase?
2002 
32.92038041 
2003 
34.25360899 
2004 
35.64083144 
2005 
37.08423443 
2006 
38.58609318 
2007 
40.14877507 
2008 
41.77474337 
2009 
43.46656106 
2010 
45.22689496 
2011 
47.05851989 
2012 
48.96432302 
2013 
50.94730846 
2014 
53.010602 
2015 
55.15745598 
2016 
57.39125451 
2017 
59.71551869 
2018 
62.13391227 
2020 
67.26849042 
2021 
69.99276861 
2022 
72.8273762 
Based on the data, the
prediction can be made that the next 3 cent increase will occur in 2017.