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> 1. The price of college is continuing to rise faster than the rate of inflation. Then maybe inflation isn't taking everything into account? My health insuran

by chime 16y ago

> 1. The price of college is continuing to rise faster than the rate of inflation. Then maybe inflation isn't taking everything into account? My health insurance cost is rising faster than inflation too. So is health care cost and nearly every service that requires labor and cannot be imported/outsourced. Doesn't that tell you that the true rate of inflation could be much higher than the publicized rate? Rate of inflation includes lots of goods that can be cheaply imported. But you cannot import enough cheap labor with PhD degrees. And these are not included in calculating the rate of inflation.

byrneseyeview 16y ago
Education is one component of inflation. Different components are rising faster or slower than the general rate of inflation. For example, housing used to inflate faster--not so much, lately. And medical care is still growing fast. But food, clothes, and especially electronics are getting cheaper.
- yummyfajitas 16y ago
  Actually, housing didn't inflate much either. Owner equivalent rent increased at a rate of only 1.4%/year between 1987 and 2008. http://www2.standardandpoors.com/spf/pdf/index/House_Price_Rent.pdf http://www2.standardandpoors.com/spf/pdf/index/House_Price_R... (I took 130% as the mean increase from exhibit 2 on page 5, but that's just an eyeball estimate.)
  - byrneseyeview 16y ago
    That's very surprising! Housing prices obviously went up, so how did this not show up in a higher cost of living?
    - yummyfajitas 16y ago
      The cost to purchase a home went up, but that isn't the same thing as the cost of housing, since home purchases have a strong component of speculative investment. An analogy to make it more obvious: imagine I sell packages consisting of 1 banana + 1 share of Chiquita stock. If Chiquita stock goes up, does that mean we had food price inflation?
      - byrneseyeview 16y ago
        If most people can't--or won't--purchase the banana without the share, then it doesn't really matter. It would be analogous to the price of food items staying constant, but the price of, e.g., packaging going up.
kiba 16y ago
The regulatory framework and special interest groups are probably causing a negative feedback loop. That, and the AMA don't like to add more doctors. Also, if we could get rid of the general education requirement, and focus on what Doctors actually need, as opposed to the idea of a liberal education, we could lower the cost of eduction by 2 years equivalence? This would also lower the cost for other majors too.
- kylemathews 16y ago
  I don't Doctors without a liberal education. Most of them are narrow-thinking enough as it is.
  - kiba 16y ago
    I don't Doctors without a liberal education. Most of them are narrow-thinking enough as it is. Would a liberal education really change a Doctor's mind? Seriously? Most of them are just hodgepodge of fact for doctors to remember and then forget when they get their degrees.
- chengas123 16y ago
  Agreed. I really didn't need to take those philosophy classes to become a software engineer.
deleted 16y ago
[deleted]
sbov 16y ago
Inflation doesn't really measure cost of living. Inflation as measured by the government is largely meaningless. They have so much leeway in what they include, and even the ability to arbitrarily tweak the actual price of a good (tv X this year is 10% better than tv X was last year, so lets tweak the price, nevermind that tv X is the cheapest tv you can buy), that the government can make the inflation number be almost whatever they want it to be.
- yummyfajitas 16y ago
  While I agree that in principle the government could use hedonic adjustments to fake the inflation rate, do you have evidence they actually do this?
  - steveplace 16y ago
    See http://en.wikipedia.org/wiki/Boskin_Commission http://en.wikipedia.org/wiki/Boskin_Commission Also, there's "core CPI" which is referenced the most often, but it doesn't include "volatile" things like food and energy.
    - yummyfajitas 16y ago
      Very interesting. According to your source, actual inflation is about 1% less than what the CPI measures, due (among other things) to a failure to make proper hedonic adjustments.
      - steveplace 16y ago
        That was back in 1995, and hedonic adjustmens are now included in CPI. Do note that COLA for Social Security is based off CPI. So the Boskin commission had a significant conflict of interest as they looked for ways to keep CPI lower. Here's a much better explanation: http://www.ritholtz.com/blog/2010/01/economists-serving-their-political-masters/ http://www.ritholtz.com/blog/2010/01/economists-serving-thei...
jacobolus 16y ago
College educations, health insurance, housing, etc. are non-tradables, goods which cannot be imported or sold on a world market. When we have a “strong” dollar, the relative price of tradable goods (imported from somewhere with a “weaker” currency) is reduced, while the relative price of non-tradables increases. The presence or absence of inflation is an orthogonal question to this exchange-rate distortion.

by chime 16y ago

byrneseyeview 16y ago

Education is one component of inflation. Different components are rising faster or slower than the general rate of inflation. For example, housing used to inflate faster--not so much, lately. And medical care is still growing fast. But food, clothes, and especially electronics are getting cheaper.

yummyfajitas 16y ago
Actually, housing didn't inflate much either. Owner equivalent rent increased at a rate of only 1.4%/year between 1987 and 2008. http://www2.standardandpoors.com/spf/pdf/index/House_Price_Rent.pdf http://www2.standardandpoors.com/spf/pdf/index/House_Price_R... (I took 130% as the mean increase from exhibit 2 on page 5, but that's just an eyeball estimate.)
- byrneseyeview 16y ago
  That's very surprising! Housing prices obviously went up, so how did this not show up in a higher cost of living?
  - yummyfajitas 16y ago
    The cost to purchase a home went up, but that isn't the same thing as the cost of housing, since home purchases have a strong component of speculative investment. An analogy to make it more obvious: imagine I sell packages consisting of 1 banana + 1 share of Chiquita stock. If Chiquita stock goes up, does that mean we had food price inflation?
    - byrneseyeview 16y ago
      If most people can't--or won't--purchase the banana without the share, then it doesn't really matter. It would be analogous to the price of food items staying constant, but the price of, e.g., packaging going up.

kiba 16y ago

The regulatory framework and special interest groups are probably causing a negative feedback loop. That, and the AMA don't like to add more doctors. Also, if we could get rid of the general education requirement, and focus on what Doctors actually need, as opposed to the idea of a liberal education, we could lower the cost of eduction by 2 years equivalence? This would also lower the cost for other majors too.

kylemathews 16y ago
I don't Doctors without a liberal education. Most of them are narrow-thinking enough as it is.
- kiba 16y ago
  I don't Doctors without a liberal education. Most of them are narrow-thinking enough as it is. Would a liberal education really change a Doctor's mind? Seriously? Most of them are just hodgepodge of fact for doctors to remember and then forget when they get their degrees.
chengas123 16y ago
Agreed. I really didn't need to take those philosophy classes to become a software engineer.

deleted 16y ago

[deleted]

sbov 16y ago

Inflation doesn't really measure cost of living. Inflation as measured by the government is largely meaningless. They have so much leeway in what they include, and even the ability to arbitrarily tweak the actual price of a good (tv X this year is 10% better than tv X was last year, so lets tweak the price, nevermind that tv X is the cheapest tv you can buy), that the government can make the inflation number be almost whatever they want it to be.

yummyfajitas 16y ago
While I agree that in principle the government could use hedonic adjustments to fake the inflation rate, do you have evidence they actually do this?
- steveplace 16y ago
  See http://en.wikipedia.org/wiki/Boskin_Commission http://en.wikipedia.org/wiki/Boskin_Commission Also, there's "core CPI" which is referenced the most often, but it doesn't include "volatile" things like food and energy.
  - yummyfajitas 16y ago
    Very interesting. According to your source, actual inflation is about 1% less than what the CPI measures, due (among other things) to a failure to make proper hedonic adjustments.
    - steveplace 16y ago
      That was back in 1995, and hedonic adjustmens are now included in CPI. Do note that COLA for Social Security is based off CPI. So the Boskin commission had a significant conflict of interest as they looked for ways to keep CPI lower. Here's a much better explanation: http://www.ritholtz.com/blog/2010/01/economists-serving-their-political-masters/ http://www.ritholtz.com/blog/2010/01/economists-serving-thei...

jacobolus 16y ago

College educations, health insurance, housing, etc. are non-tradables, goods which cannot be imported or sold on a world market. When we have a “strong” dollar, the relative price of tradable goods (imported from somewhere with a “weaker” currency) is reduced, while the relative price of non-tradables increases. The presence or absence of inflation is an orthogonal question to this exchange-rate distortion.