Payments for this year’s permanent fund dividend started Thursday. More than 600,000 Alaskans will get the $1,000 PFD – and when adjusted for inflation, it’s the smallest amount in state history.
Alaska Public Media’s Ava White spoke with Brett Watson, an economist with the University of Alaska Anchorage’s Institute of Social and Economic Research. He wanted to know how the purchasing power of the PFD has changed over the decades. And to do that he picked three years, 1982, 2003 and 2025 – all years with a PFD of around $1,000.
“I think looking at the PFD in this way tells us as much about how we think about inflation or the things that we buy as it does about the dividend itself,” Watson said.
Here are four graphics that show how much the purchasing power of your PFD has changed over the years. Scroll down for an interview with Watson.
This interview has been lightly edited for clarity and length.
Ava White: What categories did you look at and why?
Brett Watson: I took a look at three different types of very specific goods or services that people might consume with their dividends. I looked at how purchasing power of televisions might have changed, how purchasing power of housing might have changed, and how purchasing power of travel services might have changed over this period. As you alluded to in your introduction, it's certainly true that the aggregate purchasing power of the dividend has shrunk over time when we think about this in terms of the purchasing power as measured by the Consumer Price Index. (The CPI is an economic indicator that measures the change over time in the prices paid by consumers for goods and services.)
But I think people might be wondering, well, what actually goes into the CPI? I think looking at it in terms of these three components provides a little bit more rich detail and helps inform us about how the CPI is actually calculated.
I thought about calculating this in just physical distance terms. So how many round trip drives could you make from Anchorage to Fairbanks on a single PFD payment? We want to account for a couple of things in this calculation. We want to look at the average fuel economy of vehicles, because that's been changing over time. We want to take into account gas prices and then obviously account for the dividend size. So we picked three years where the PFD was roughly the same size.
So, how many times could you make that round trip drive, given the typical vehicle that you might be driving in, 1982, 2003, and 2025, and prevailing gas prices at the time?
In 1982 you might be able to make that round trip drive between Anchorage and Fairbanks 16 times on a single PFD payment. In 2003 you might be able to make that same drive 14 times. In 2025 though, you'd only be able to make that round trip drive eight times, so half the number of round trips between Anchorage and Fairbanks.
AW: And then what about housing?
BW: In this overall CPI calculation fuel or energy, makes up about 10% of the typical consumer basket. So it's an important part of the consumer basket, but it's not the most important part. In fact, the most important part of the CPI is how much we spend on shelter or housing.
That was another component that we looked at for this little analysis. We compared the price of housing in Anchorage in those same time periods. In 1982, the typical home in Anchorage was selling for about $120,000. In 2003, the typical home was selling for $180,000. In 2025, the typical home in Anchorage was selling for $390,000, and you can see pretty considerable escalation in that housing category. And that's really important, because housing is the most important part of our consumption basket. We spend about 30% or 40% of our income on shelter. So if there's a lot of inflation in that category, it really erodes our overall purchasing power.
If housing prices are really inflating, they really eat away at our purchasing power. This is a really important part of explaining that statistic you said earlier, which is that this is the lowest dividend in inflation adjusted terms to date.
If you think about how many dividends it would take you to purchase a home. In 1982 it would take you 120 dividends or so to be able to buy a house. And in 2025 it would take you almost 400 dividends to buy a house, four times as many PFDs in order to purchase a home then as it would now.
AW: Should we do TVs?
BW: Many people probably had the experience of going to Costco in early October and seeing shopping carts full of televisions. It’s hard not to relate the PFD to purchases of these big ticket consumer durable items, like televisions.
In 1982 what kind of TV could you buy for your $1,000 dividend back then? Well, you might have purchased an RCA color swivel track. This was a 25 inch television, it came in one of those big wooden cabinets that probably weighed like 200 pounds. The advertisement said that it came with a remote, which was a kind of an exciting feature for this television in 1982.
Fast forward to 2003, how much TV could you buy for your $1,100 dividend that year? Well, you might have reached for a Sony Wega 36 inch television. So this is one of the first flat screen televisions that was on the market – gone are the days of these big wooden box televisions, and they're starting to be replaced now with larger flat screen TVs.
What can you buy for $1,000 today in the TV market? Well, that might buy you a Sony BRAVIA LED 4K Ultra High Definition Smart TV. You could probably get a 75 inch TV for that $1,000 dividend in 2025. Not only is it considerably larger, almost three times the screen size of that television from 1982, it also weighs less.
Some categories, they're not getting more expensive, but they are getting better quality. And so this is another important thing that economists do when they go out to measure inflation, they've got to create these quality adjustment measures. We're just getting a lot more for our money in terms of the quality of those products today than we did in the past, and so it's important to account for both of these features, not just the price of what you're purchasing, but also the quality of what you're getting.
AW: So, the three categories that we've talked about so far – so your PFD can now buy you a way nicer TV number one, but one that's three times the size and way lighter. But it'll take you four times the amount of PFDs to buy a house. And, as far as it actually takes you, like, mileage wise, about half as it used to.
BW: That’s right.
AW: Then what about median household income?
BW: We can compare these three dividends to the typical household income that Alaskans were earning in these different years. When I say median here, I mean that's a measure of the typical household income.
In 1982 the typical income was $32,000 a year for a household. The typical household size in 1982 was about 2.8 people, and so the PFD in that year would have been worth about 9% of your household income. Or another way to think about this is that it was worth about four and a half weeks, or about a month's worth of a typical household's income.
In 2003 household incomes rose. This is a good thing. Along with inflation, incomes are rising over this time period. Typical household income in 2003 was about $52,000. [The] typical household size was getting smaller, so people were receiving less PFDs on average for their homes. The PFD only accounted for about seven or 6% of the income for a typical household. So that's about three weeks. So we've lost about a week and a half's worth of income for a typical home.
In 2024, median household income was $91,000. Household size was just a little bit smaller, 2.6 and so a dividend would represent about 3% of income, or just one and a half weeks.
We went from the dividend representing four and a half weeks of a typical Alaska's income to three weeks to just a week and a half. And that's because both household sizes are shrinking a little bit. But more importantly, Alaskan families are getting richer, which is good.
AW: Out of all of these, which was the most interesting to you, or, [most] easy to go down a rabbit hole?
BW: I love looking at these old television ads. The features on some of these old TVs that we take for granted today, advertising them as cutting edge, even just 12 years ago. I thought it was really fun.
Obviously, the most depressing was looking at the housing statistics, where we've seen so much inflation in the Anchorage market. And these statistics, I think, would apply broadly statewide.
If you look at a listing for a home today in Anchorage, the median home that you're gonna probably buy, was built in 1982. And obviously that was the typical home that you were also gonna buy in 1982 and in 2003. Our stock of housing just hasn't changed that much. And while these homes might have been updated a little bit over that time period, they're still just significantly older than they were in the past, but they're significantly more expensive. Unlike wine, which tends to age well, houses do not.
AW: That does hurt to think about. More broadly, what do we know about how Alaskans spend their PFDs?
BW: We know a lot less than we might think we should. Economists, including economists at ISER, have historically done surveys of Alaskans. The first such study was done in 1984 just after the second dividend payment came out. They found that something like half the dividend gets spent and half the dividend gets saved or used to pay down debt. More recent survey data has found pretty similar things, that people spend around half their dividends and put the other half toward savings or paying down debt. It's interesting to look at how households are spending that 50% that they're saying that they're spending.
The tricky part is thinking about how they're spending the other half that they're saving or using to pay down debt, because obviously, savings just represents spending that will happen in the future. Paying down debt just represents consumption that happened in the past. It's much more difficult to get people to think about what they might spend their dividend on in the future, if they're putting into savings, or what they spent their dividend on six months ago, when they put something on a credit card.
AW: Obviously, this is the lowest PFD ever when adjusted for inflation. I haven't spent much time talking to Alaskans about what they think of that amount. I've seen a lot on social media, but what do you think this amount means for the average Alaskan?
BW: As we talked about looking through some of the statistics, it means less. Generally speaking, for the stuff that we buy, it's not going as far, and it also means less because Alaskans have gotten a lot richer over the last 10 years. Their income from other sources has grown.
AW: What are you spending your PFD on, a 75 inch TV?
BW: That might be in the cards for me. I've also got my eyes on a new fat bike.
Alaska Public Media's Eric Stone contributed to this story.
Editor’s note: The graphics in this story were generated using an AI tool and verified by an editor and reporter. Alaska Public Media’s news team follows NPR’s ethics policy. You can find their AI section here.
