4 ms·

Hm, I wonder if anyone’s tried to popularize an alternative inflation measure to CPI that either discounts hedonic adjustments, or tries to be more “honest” abo

by ericd 5y ago

Hm, I wonder if anyone’s tried to popularize an alternative inflation measure to CPI that either discounts hedonic adjustments, or tries to be more “honest” about it somehow, perhaps by trying to measure relative user happiness or something (though that’d be super shaky).

iagovar 5y ago
It's a lot of work honestly. I once played with that idea (not for the US) but I have a life and so on...
- em500 5y ago
  Yup, productionalizing a comprehensive CPI is a boring, thankless and expensive (household surveys, not just webscraping!) undertaking. Which is why we pay a big government department to do it for us. The sceptical but honest truth-seeker would discover, after months of labour that the official quality-adjusted BLS numbers are reasonably sane, maybe understated by a few tens of pct-points, and the hedonic adjustments will add about 0.5 to 1%, which is probably a reasonable estimate of overall quality improvements. That truth is so mundane that your months of labour will barely net you a Medium blogpost. Or you take a shortcut, just add 1.5 to 2%-points to the BLS numbers and sell it in a newsletter, like shadowstats...
  - SilasX 5y ago
    You think "TVs are 10% of their quality-adjusted price from 1998" is sane?
    - OscarCunningham 5y ago
      Look at these TVs that cost $3000 in 1997: https://www.cnet.com/news/are-tvs-really-cheaper-than-ever-we-go-back-a-few-decades-to-see/ https://www.cnet.com/news/are-tvs-really-cheaper-than-ever-w.... You can definitely get a better TV now for $300. I think the point of this article is that the TV you could buy for $300 in 1997 you can't now buy for $30. So the 10 times increase in quality hasn't allowed a 10 times reduction in cost of living.
    - labcomputer 5y ago
      Erm... yes? Am I supposed to think it isn't? Here's a Best Buy ad from 1998: https://www.chron.com/news/article/Best-Buy-ad-from-1998-shows-how-ridiculously-much-6156324.php#photo-7710257 https://www.chron.com/news/article/Best-Buy-ad-from-1998-sho... Here's a Best Buy listing from today: https://www.bestbuy.com/site/insignia-32-class-n10-series-led-hd-tv/6395127.p?skuId=6395127 https://www.bestbuy.com/site/insignia-32-class-n10-series-le... In 1998, a 27" CRT TV was $300 in 1998 dollars. Today's 32" LCD TV is $120. Just in nominal dollars, not adjusted for inflation, the new TV costs 40% as much as the one from 1998. Then the offical CPI says $300 1998 dollars are worth around $500 2021 dollars... so that brings us down to about 24% before making any hedonistic adjustment. [Edit: And, really, we should be comparing a 32" TV from 1998. That's not in the ad, but it is plausible to imagine it costs more than any of the 27" models. Let's call it $450 just to be conservative. That gets you to around 15% w/ CPI and no hedonistic adjustment] But the new TV has twice as many lines of resolution, a bigger screen, better color, uses a fraction as much power, is lighter and is physically smaller. So the operating cost is lower, you can put it anywhere you want, you have a bigger and nicer picture to look at. I'm sort of baffled how someone could not agree that the newer one is very clearly better. I suspect that if you offered most people a CRT version of today's TV, nobody would take it at even half the price. That gets you to within spitting distance of 10%. You can perform the same exercise with other size tubes, but the result is basically the same.
      - deleted 5y ago
        [deleted]
      - trophycase 5y ago
        The TV isn't 1000% more entertaining though
        SilasX 5y ago
        Not sure why downvoted, this is an important point: utility is sublinear in most dimensions of product quality. For example, a desktop computer with everything the same but 2x the CPU speed is less than 2x as useful. Don't tell Dudley though: >>“Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said.”You have to look at the prices of all things.” https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUSTRE72A4AC20110311 https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
hnzix 5y ago
Not CPI, but Western China-watchers (eg Morningstar) use various proxies for China's GDP since they assert that the official numbers are often politicized.
jerf 5y ago
Yes: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts However, I'm just answering your question, not endorsing that per se. Here's some skepticism, which I am also not endorsing, just balancing and emphasizing my lack of endorsement: https://munknee.com/debunking-validity-shadowstats-inflation-numbers/ https://munknee.com/debunking-validity-shadowstats-inflation... Personally I suspect the answer is somewhere in between. Arguably it's not even a well-defined question. Clearly something like inflation and deflation can exist, even across large time periods, but there may be no single number that can ever capture it accurately. I am somewhat reminded of the difficulties of trying to fix an absolute reference frame in physics, especially when trying to fix it to locations on Earth over large periods of time.
- ericd 5y ago
  Thanks for the links! Agreed, it’s extremely hard to do well - the basket of goods that one would consider reasonable doesn’t even stay the same over time, computers get added, gasoline (hopefully) drops out.

by ericd 5y ago

iagovar 5y ago

It's a lot of work honestly. I once played with that idea (not for the US) but I have a life and so on...

em500 5y ago
Yup, productionalizing a comprehensive CPI is a boring, thankless and expensive (household surveys, not just webscraping!) undertaking. Which is why we pay a big government department to do it for us. The sceptical but honest truth-seeker would discover, after months of labour that the official quality-adjusted BLS numbers are reasonably sane, maybe understated by a few tens of pct-points, and the hedonic adjustments will add about 0.5 to 1%, which is probably a reasonable estimate of overall quality improvements. That truth is so mundane that your months of labour will barely net you a Medium blogpost. Or you take a shortcut, just add 1.5 to 2%-points to the BLS numbers and sell it in a newsletter, like shadowstats...
- SilasX 5y ago
  You think "TVs are 10% of their quality-adjusted price from 1998" is sane?
  - OscarCunningham 5y ago
    Look at these TVs that cost $3000 in 1997: https://www.cnet.com/news/are-tvs-really-cheaper-than-ever-we-go-back-a-few-decades-to-see/ https://www.cnet.com/news/are-tvs-really-cheaper-than-ever-w.... You can definitely get a better TV now for $300. I think the point of this article is that the TV you could buy for $300 in 1997 you can't now buy for $30. So the 10 times increase in quality hasn't allowed a 10 times reduction in cost of living.
  - labcomputer 5y ago
    Erm... yes? Am I supposed to think it isn't? Here's a Best Buy ad from 1998: https://www.chron.com/news/article/Best-Buy-ad-from-1998-shows-how-ridiculously-much-6156324.php#photo-7710257 https://www.chron.com/news/article/Best-Buy-ad-from-1998-sho... Here's a Best Buy listing from today: https://www.bestbuy.com/site/insignia-32-class-n10-series-led-hd-tv/6395127.p?skuId=6395127 https://www.bestbuy.com/site/insignia-32-class-n10-series-le... In 1998, a 27" CRT TV was $300 in 1998 dollars. Today's 32" LCD TV is $120. Just in nominal dollars, not adjusted for inflation, the new TV costs 40% as much as the one from 1998. Then the offical CPI says $300 1998 dollars are worth around $500 2021 dollars... so that brings us down to about 24% before making any hedonistic adjustment. [Edit: And, really, we should be comparing a 32" TV from 1998. That's not in the ad, but it is plausible to imagine it costs more than any of the 27" models. Let's call it $450 just to be conservative. That gets you to around 15% w/ CPI and no hedonistic adjustment] But the new TV has twice as many lines of resolution, a bigger screen, better color, uses a fraction as much power, is lighter and is physically smaller. So the operating cost is lower, you can put it anywhere you want, you have a bigger and nicer picture to look at. I'm sort of baffled how someone could not agree that the newer one is very clearly better. I suspect that if you offered most people a CRT version of today's TV, nobody would take it at even half the price. That gets you to within spitting distance of 10%. You can perform the same exercise with other size tubes, but the result is basically the same.
    - deleted 5y ago
      [deleted]
    - trophycase 5y ago
      The TV isn't 1000% more entertaining though
      - SilasX 5y ago
        Not sure why downvoted, this is an important point: utility is sublinear in most dimensions of product quality. For example, a desktop computer with everything the same but 2x the CPU speed is less than 2x as useful. Don't tell Dudley though: >>“Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said.”You have to look at the prices of all things.” https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUSTRE72A4AC20110311 https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...

hnzix 5y ago

Not CPI, but Western China-watchers (eg Morningstar) use various proxies for China's GDP since they assert that the official numbers are often politicized.

jerf 5y ago

Yes: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts However, I'm just answering your question, not endorsing that per se. Here's some skepticism, which I am also not endorsing, just balancing and emphasizing my lack of endorsement: https://munknee.com/debunking-validity-shadowstats-inflation-numbers/ https://munknee.com/debunking-validity-shadowstats-inflation... Personally I suspect the answer is somewhere in between. Arguably it's not even a well-defined question. Clearly something like inflation and deflation can exist, even across large time periods, but there may be no single number that can ever capture it accurately. I am somewhat reminded of the difficulties of trying to fix an absolute reference frame in physics, especially when trying to fix it to locations on Earth over large periods of time.

ericd 5y ago
Thanks for the links! Agreed, it’s extremely hard to do well - the basket of goods that one would consider reasonable doesn’t even stay the same over time, computers get added, gasoline (hopefully) drops out.