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Fascinating discussion about technological development. The article didnt say if there is a part two where he answers the question posed in the title. Inflatio

Fascinating discussion about technological development. The article didnt say if there is a part two where he answers the question posed in the title. Inflation (or really the deflating cost of light) is mentioned, and we can infer many things that probably matter based on the falling price, but I still want to know why it matters.

wutbrodo 10y ago
> I still want to know why it matters I think the headline was just a catchy way to refer to the thesis of the article: that relying too much on inflation adjustments to make apples-to-apples comparisons misses part of the picture
azernik 10y ago
The point is that we talk about inflation (and hence, real economic growth) by comparing equivalent baskets of goods and services year-to-year. However, that "equivalent" part is actually non-trivial - how do you decide how much more this year's iPhone 6 is worth than last year's iPhone 5 when you're trying to determine inflation in consumer products prices? (In periods of rapid technological change, the comparisons are much weirder - how do you compare consumer prices when people suddenly start buying cars, or personal computers?)
- branchless 10y ago
  The UK doesn't reflect land price increases into inflation stats so any debate over other marginal factors is a waste of time. Inflation figures are a tool for printing via land and for soft default on debt obligations.
- Someone 10y ago
  As you may already know, a way that is done (1) is by choosing a 'basket' of products, for example "that what a typical family of four spends its money on", and periodically updating that (e.g. by replacing cable tv by a Netflix subscription). That's similar to the way the components in the Dow Jones industrial are updated to reflect the average US industrial fund (https://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Historical_components_of_the_D...) (1) it isn't really possible to do it at all, but it is done that way, anyways.
  - azernik 10y ago
    What this study is trying to point out is that this substitution doesn't capture the increase in value from switching to the new technologies. That methodology might not capture the superiority (or inferiority) of Netflix as a value proposition. ie if there's a one-to-one substitution of spending but you're getting more for your money, that's a deflation effect that your methodology may not catch. Usually because it's hard to quantify the relative values of different related products. Light is a theoretically interesting exception that this researcher used to prove a point.
pjc50 10y ago
It's an example of technology enabling the production of more with less human input, and therefore the freeing up of humans to do other things such as develop more technology. Similar work has been done for e.g. textiles; in the pre-machine era, the amount of work for even a simple shirt in today's minimum-wage-dollars is something like $3000. The dishwasher/washing machine are, along with textile automation, major liberators of women's work.
- tomjen3 10y ago
  My grandma weaved, on a non-mechanical loom, and sewed a light jacket for herself (one that was not even slightly water resistant). She estimated that it took 200 hours, but she also pointed out something else: she was the only one in her weaving group who could make one, and the group has been weaving for years. So you are not even looking for minimum-wage-dollars. You are looking for semi-skilled labour; and those 200 hours didn't include making and dying the yarn, growing and harvesting the plants, etc (she purchased or were given the yarn). I love my dishwasher, but that doesn't even come close to reducing the cost of a light jacket by a factor of 100-1000. My washing machine is of much more utility since I spend only maybe ten minutes a week washing vs an entire days worth of labour.

wutbrodo 10y ago

> I still want to know why it matters I think the headline was just a catchy way to refer to the thesis of the article: that relying too much on inflation adjustments to make apples-to-apples comparisons misses part of the picture

azernik 10y ago

The point is that we talk about inflation (and hence, real economic growth) by comparing equivalent baskets of goods and services year-to-year. However, that "equivalent" part is actually non-trivial - how do you decide how much more this year's iPhone 6 is worth than last year's iPhone 5 when you're trying to determine inflation in consumer products prices? (In periods of rapid technological change, the comparisons are much weirder - how do you compare consumer prices when people suddenly start buying cars, or personal computers?)

branchless 10y ago
The UK doesn't reflect land price increases into inflation stats so any debate over other marginal factors is a waste of time. Inflation figures are a tool for printing via land and for soft default on debt obligations.
Someone 10y ago
As you may already know, a way that is done (1) is by choosing a 'basket' of products, for example "that what a typical family of four spends its money on", and periodically updating that (e.g. by replacing cable tv by a Netflix subscription). That's similar to the way the components in the Dow Jones industrial are updated to reflect the average US industrial fund (https://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Historical_components_of_the_D...) (1) it isn't really possible to do it at all, but it is done that way, anyways.
- azernik 10y ago
  What this study is trying to point out is that this substitution doesn't capture the increase in value from switching to the new technologies. That methodology might not capture the superiority (or inferiority) of Netflix as a value proposition. ie if there's a one-to-one substitution of spending but you're getting more for your money, that's a deflation effect that your methodology may not catch. Usually because it's hard to quantify the relative values of different related products. Light is a theoretically interesting exception that this researcher used to prove a point.

pjc50 10y ago

It's an example of technology enabling the production of more with less human input, and therefore the freeing up of humans to do other things such as develop more technology. Similar work has been done for e.g. textiles; in the pre-machine era, the amount of work for even a simple shirt in today's minimum-wage-dollars is something like $3000. The dishwasher/washing machine are, along with textile automation, major liberators of women's work.

tomjen3 10y ago
My grandma weaved, on a non-mechanical loom, and sewed a light jacket for herself (one that was not even slightly water resistant). She estimated that it took 200 hours, but she also pointed out something else: she was the only one in her weaving group who could make one, and the group has been weaving for years. So you are not even looking for minimum-wage-dollars. You are looking for semi-skilled labour; and those 200 hours didn't include making and dying the yarn, growing and harvesting the plants, etc (she purchased or were given the yarn). I love my dishwasher, but that doesn't even come close to reducing the cost of a light jacket by a factor of 100-1000. My washing machine is of much more utility since I spend only maybe ten minutes a week washing vs an entire days worth of labour.