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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 "e

by 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.

by azernik 10y ago

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.