4 ms·

"core" CPI includes housing. This is funky for another reason: people don't live in similar housing to what people lived in in the past. If you look at census

"core" CPI includes housing. This is funky for another reason: people don't live in similar housing to what people lived in in the past. If you look at census data (American Housing Survey) from 40-50 years ago, you find the average American home was under 1500 square feet, 2-3 bedrooms, 1-2 bathrooms, no AC, no laundry machines, and so on. In fact, the average American home in the 1970s was smaller and had less amenities than the average current American home for people below the poverty line. Any measure that just looks at the change in housing costs and doesn't adjust for the benefits of on-average larger homes with more amenities will end up overestimating that piece of monetary inflation (accidentally counting lifestyle inflation.) As you say, it's really hard to measure the "real value increase of a product", and that makes a lot of inflation measures... sketchy.

maxxxxx 9y ago
If only we could buy 1000 square foot houses in expensive areas. They don't get built anymore.
- lotharbot 9y ago
  yeah, building and zoning are certainly relevant considerations. I'm not saying "this is all the fault of consumers". More like "when we measure inflation, we conflate monetary and lifestyle inflation, and our preferred policy ideas might not reflect that."
taysic 9y ago
Lol the house you described would go over a million in the Bay Area and it was built before the 70s too. No heating or ac gets installed too. So I wonder how that gets accounted for in inflation?
- jdavis703 9y ago
  Most houses don't have dishwashers, washing machines or clothes dryers as far as I can tell either.
  - lotharbot 9y ago
    from the 2015 data set via https://www.census.gov/programs-surveys/ahs.html https://www.census.gov/programs-surveys/ahs.html : out of 118.29 million housing units, 80.8m (68%) have dishwashers, 97.6m (82%) have washing machines, and 95.7m (81%) have dryers. For the grandparent: 105m (89%) have AC, and 112m (94%) have a furnace or heat pump or water/steam heat or built-in electric heat of some sort. All of those numbers would qualify as "most". Looking at the oldest stats I can find for each of those categories: 1970 -- out of ~75.3 million housing units, 35.3m (47%) have AC, and 62.6m (83%) have a furnace or heat pump or water/steam heat or built-in electric heat of some sort. 1985 -- out of 99.9 million units, 42m (42% heh) had dishwashers, 67m (67%) had washing machines, and 58m (58%) had clothes dryers. So 26% more homes have dishwashers, 15% more have washing machines, 23% more have dryers, 42% more have AC, and 11% more have better heating systems compared to the earliest data I was able to find. Point being, there's been a significant increase in the availability of many important in-house amenities over the last 50 years. Not that everyone has every amenity, but a lot more people have them, and that definitely affects the way we should interpret stats relating to housing costs.
linkregister 9y ago
Are larger houses materially improving anyone’s lives? Over a certain amount of space, increases experience diminishing returns. Meanwhile, the important things, such as percentage of income directed toward expenses and debt payment, and amount of leisure, may not have improved. More households are composed of both prime-age adults working than 30 years ago. Are expenses simply rising to match this rate of increased employment? Either way, it’s sketchy until those factors are quantified.
- lotharbot 9y ago
  > "Over a certain amount of space, increases experience diminishing returns" Indeed. And yet, that's what we buy. Or, that's what's being built and therefore that's what we can buy. I don't know whether buyers or builders/zoning are to blame, I just know that when we try to measure inflation, it's really hard to divide monetary inflation from lifestyle inflation -- how much is "money is worth less", and how much of it is "you're buying something better"?

maxxxxx 9y ago

If only we could buy 1000 square foot houses in expensive areas. They don't get built anymore.

lotharbot 9y ago
yeah, building and zoning are certainly relevant considerations. I'm not saying "this is all the fault of consumers". More like "when we measure inflation, we conflate monetary and lifestyle inflation, and our preferred policy ideas might not reflect that."

taysic 9y ago

Lol the house you described would go over a million in the Bay Area and it was built before the 70s too. No heating or ac gets installed too. So I wonder how that gets accounted for in inflation?

jdavis703 9y ago
Most houses don't have dishwashers, washing machines or clothes dryers as far as I can tell either.
- lotharbot 9y ago
  from the 2015 data set via https://www.census.gov/programs-surveys/ahs.html https://www.census.gov/programs-surveys/ahs.html : out of 118.29 million housing units, 80.8m (68%) have dishwashers, 97.6m (82%) have washing machines, and 95.7m (81%) have dryers. For the grandparent: 105m (89%) have AC, and 112m (94%) have a furnace or heat pump or water/steam heat or built-in electric heat of some sort. All of those numbers would qualify as "most". Looking at the oldest stats I can find for each of those categories: 1970 -- out of ~75.3 million housing units, 35.3m (47%) have AC, and 62.6m (83%) have a furnace or heat pump or water/steam heat or built-in electric heat of some sort. 1985 -- out of 99.9 million units, 42m (42% heh) had dishwashers, 67m (67%) had washing machines, and 58m (58%) had clothes dryers. So 26% more homes have dishwashers, 15% more have washing machines, 23% more have dryers, 42% more have AC, and 11% more have better heating systems compared to the earliest data I was able to find. Point being, there's been a significant increase in the availability of many important in-house amenities over the last 50 years. Not that everyone has every amenity, but a lot more people have them, and that definitely affects the way we should interpret stats relating to housing costs.

linkregister 9y ago

Are larger houses materially improving anyone’s lives? Over a certain amount of space, increases experience diminishing returns. Meanwhile, the important things, such as percentage of income directed toward expenses and debt payment, and amount of leisure, may not have improved. More households are composed of both prime-age adults working than 30 years ago. Are expenses simply rising to match this rate of increased employment? Either way, it’s sketchy until those factors are quantified.

lotharbot 9y ago
> "Over a certain amount of space, increases experience diminishing returns" Indeed. And yet, that's what we buy. Or, that's what's being built and therefore that's what we can buy. I don't know whether buyers or builders/zoning are to blame, I just know that when we try to measure inflation, it's really hard to divide monetary inflation from lifestyle inflation -- how much is "money is worth less", and how much of it is "you're buying something better"?