5 ms·

Cars are included in the CPI. Don't spread FUD. https://www.bls.gov/cpi/factsheets/new-vehicles.htm https://www.bls.gov/cpi/factsheets/new-vehicles.htm

zaptheimpaler 5y ago
https://www.epsilontheory.com/im-trying-to-understand-hedonic-adjustments/#.YJntUKIek98.twitter https://www.epsilontheory.com/im-trying-to-understand-hedoni... "A Honda Accord cost $12,000 in 1990 and it costs $25,000 now. A Mustang was $9,000 and now it’s $27,000. The BLS has new car prices close to unchanged over the past 30 years." Whatever you think of the validity of "hedonic adjustments", this is certainly not what I would expect when BLS reports car prices as unchanged during that period.
- namdnay 5y ago
  I’d be wary of comparing models across such a long time period, car makers have a habit of gradually drifting up each model (because it’s hard to release a smaller/simpler model than the preceding one) To take a European example, a 1990s VW golf is smaller and slower than a 2020 polo.
- ensignavenger 5y ago
  The Honda Accord of 1990 is a different class of vehicle than the Honda Accord of 2021. In 2021, there are other entry level vehicles that can be purchased for much less than an Accord.
  - MontyCarloHall 5y ago
    Indeed. A 2021 Accord is far superior to a 1990 Rolls Royce or other ultraluxury car in terms of amenities, engine power, quietness, build quality, etc. That’s not even mentioning the leaps and bounds in efficiency and safety. I’d argue cars have gotten effectively cheaper over the years, as they’ve dramatically improved in every respect. If you could still buy a 1990 Accord manufactured today, it would probably sell for a couple thousand dollars. Edit: as for the Mustang example in the grandparent post, that $27,000 Mustang of today outperforms entry-level Ferraris of 1990. A fully-spec’d $80,000 Mustang of today would outperform every Ferrari from 1990, including the F40, which sold for $400,000 in 1990 dollars (~$800k in today’s dollars). So if anything, the CPI doesn’t implement hedonic adjustments enough for cars.
    - ensignavenger 5y ago
      That wasn't exactly what I meant, but it is true.
    - ragnese 5y ago
      Tangentially, wouldn't it be nice if we could buy a 1990-quality car for the inflation-adjusted price? Poor(ish) people would have a decent shot at actually affording reliable transportation and climbing up the ladder.
      - MontyCarloHall 5y ago
        With the exception of a few brands (e.g. Honda, Toyota), I’m not sure the dismal mechanical quality of many 1990-quality cars would save people money versus buying a 10 year old used car for the same money. Remember, 1990 is still the era of the 5 digit odometer. Cars have gotten hugely more reliable over the years. A 2010 car hitting 200k miles is routine and expected; a 1990 car hitting 200k miles would be exceptional. Also, no 1990 car would pass modern safety standards. Few would pass emission standards. A big reason for the increase in engine performance (and thus complexity/cost) is due to the weight of all the safety equipment that’s required today.
        lumost 5y ago
        This gives cart blanche to mark the price increases of each car year as hedonic adjustments. The BLS can simply say the price increase is due to enhancements. While some fraction of the increase is due to improvements, at least a portion is due to direct inflation. Further, if the reality is that a 1990 equivalent car cannot be purchased today - then the consumer who could only afford the 1990 accord will instead buy used. Is this person going to feel wealthier than they did in 1990?
        MontyCarloHall 5y ago
        > The BLS can simply say the price increase is due to enhancements. Hedonic regression actually quantifies the expected year-over-year price changes due to quality changes. It doesn’t give automakers carte blanche to increase prices, because a year-over-year price increase without quality increases commensurate with previous years will increase the residuals of the regression prediction for the current year. > Is this person going to feel wealthier than they did in 1990? Yes, because a 10 year old car in 2021 is still leaps and bounds better than a 1990 equivalent new car. Drive a few miles in a 2010 Civic (an entry level car), then drive a few miles in a 1990 Accord (a midrange car). You’ll be amazed at how much better the 10 year old Civic is in every aspect.
  - deleted 5y ago
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- 542458 5y ago
  “Car prices are not evaluated in a way I agree with” is a very different argument from “Cars prices aren’t evaluated at all”.
- ahahahahah 5y ago
  Whatever you think of the validity of "hedonic adjustments" doesn't really matter as far as cars are concerned because the BLS doesn't apply hedonic adjustments to car prices.
  - MontyCarloHall 5y ago
    Yes they do: https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf
    - gruez 5y ago
      that says quality adjustments, not hedonic adjustments.
      - MontyCarloHall 5y ago
        Aren’t “quality adjustments” by definition “hedonic adjustments”? How are these not hedonic adjustments? From the linked PDF: “BLS adjusts for structural and engineering quality changes such as: • Changes that affect the safety of occupants of the vehicle as mandated by legislated federal or state standards, and for purposes of IPP export items, applicable foreign market standards. Changes in safety features not required by legislated standards will be evaluated on a case-by-case basis. • Changes in mechanical or electrical features that affect the overall operation or efficiency of the vehicle, or the ability of a component to perform its function, such as changes affecting steering, braking, stability, engine horsepower, traction control, transmission, battery life, and fuel systems and/or electrical systems. • Changes in design or materials that affect the length of service, durability, need for repairs, or strength or performance of the item, such as stronger bumpers, HID headlamps, flexible body panels, platinum-tipped spark plugs, or warranty changes. • Changes that affect comfort or convenience, if supported by evidence of a functional or software improvement, such as redesigned seat belts, remote door locks, theft deterrent systems, navigation and communication systems, satellite radio hardware, drive assist systems, backup cameras, sensors or changes in storage capacity.”
- mcguire 5y ago
  "Quality adjustments are based on costs provided by manufacturers in categories such as reliability, durability, safety, fuel economy, maneuverability, speed, acceleration/deceleration, carrying capacity, and comfort or convenience. Adjustments are also made when equipment is added or deleted from the tracked model. Adjustments are not made for changes in gasoline content due to mandated air quality requirements. Additional information is available in the Guidelines for Quality Adjustment of New Vehicles Prices document." (https://www.bls.gov/cpi/factsheets/new-vehicles.htm https://www.bls.gov/cpi/factsheets/new-vehicles.htm) The Guidelines for Quality Adjustment of New Vehicle Prices are at https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf. New Vehicle CPI has increased 22% since 1990 (https://data.bls.gov/pdq/SurveyOutputServlet https://data.bls.gov/pdq/SurveyOutputServlet).
- nly 5y ago
  Cars, like homes, live in a debt market. I can't speak for the US but here in the UK more than 90% of new, private car registrations are supported by purchases made on finance[0]. High car and house prices are what you get when you have unprecedented close-to-zero interest rates for this long. Prices = f(interest rates, affordability) [0] https://www.fla.org.uk/media/facts-and-figures/ https://www.fla.org.uk/media/facts-and-figures/
  - namdnay 5y ago
    > I can't speak for the US but here in the UK more than 90% of new, private car registrations are supported by purchases made on finance I would be wary of this statistic, because it could just mean that only people with leasing plans are buying new cars, and everyone else is buying the cars coming out of lease (which makes sense financially, a car loses something like 30% of its value in the first two years?)
stretchwithme 5y ago
If by FUD you mean doubt in the validity of government statistics, you are correct. But deceptive things should be doubted.
a-posteriori 5y ago
Why is questioning the CPI methodology FUD?
- fanciestManimal 5y ago
  The claim was incorrect. They are included. That's fundamentally different than claiming some kind of issue with how this information is calculated for cars.
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zaptheimpaler 5y ago

https://www.epsilontheory.com/im-trying-to-understand-hedonic-adjustments/#.YJntUKIek98.twitter https://www.epsilontheory.com/im-trying-to-understand-hedoni... "A Honda Accord cost $12,000 in 1990 and it costs $25,000 now. A Mustang was $9,000 and now it’s $27,000. The BLS has new car prices close to unchanged over the past 30 years." Whatever you think of the validity of "hedonic adjustments", this is certainly not what I would expect when BLS reports car prices as unchanged during that period.

namdnay 5y ago
I’d be wary of comparing models across such a long time period, car makers have a habit of gradually drifting up each model (because it’s hard to release a smaller/simpler model than the preceding one) To take a European example, a 1990s VW golf is smaller and slower than a 2020 polo.
ensignavenger 5y ago
The Honda Accord of 1990 is a different class of vehicle than the Honda Accord of 2021. In 2021, there are other entry level vehicles that can be purchased for much less than an Accord.
- MontyCarloHall 5y ago
  Indeed. A 2021 Accord is far superior to a 1990 Rolls Royce or other ultraluxury car in terms of amenities, engine power, quietness, build quality, etc. That’s not even mentioning the leaps and bounds in efficiency and safety. I’d argue cars have gotten effectively cheaper over the years, as they’ve dramatically improved in every respect. If you could still buy a 1990 Accord manufactured today, it would probably sell for a couple thousand dollars. Edit: as for the Mustang example in the grandparent post, that $27,000 Mustang of today outperforms entry-level Ferraris of 1990. A fully-spec’d $80,000 Mustang of today would outperform every Ferrari from 1990, including the F40, which sold for $400,000 in 1990 dollars (~$800k in today’s dollars). So if anything, the CPI doesn’t implement hedonic adjustments enough for cars.
  - ensignavenger 5y ago
    That wasn't exactly what I meant, but it is true.
  - ragnese 5y ago
    Tangentially, wouldn't it be nice if we could buy a 1990-quality car for the inflation-adjusted price? Poor(ish) people would have a decent shot at actually affording reliable transportation and climbing up the ladder.
    - MontyCarloHall 5y ago
      With the exception of a few brands (e.g. Honda, Toyota), I’m not sure the dismal mechanical quality of many 1990-quality cars would save people money versus buying a 10 year old used car for the same money. Remember, 1990 is still the era of the 5 digit odometer. Cars have gotten hugely more reliable over the years. A 2010 car hitting 200k miles is routine and expected; a 1990 car hitting 200k miles would be exceptional. Also, no 1990 car would pass modern safety standards. Few would pass emission standards. A big reason for the increase in engine performance (and thus complexity/cost) is due to the weight of all the safety equipment that’s required today.
      - lumost 5y ago
        This gives cart blanche to mark the price increases of each car year as hedonic adjustments. The BLS can simply say the price increase is due to enhancements. While some fraction of the increase is due to improvements, at least a portion is due to direct inflation. Further, if the reality is that a 1990 equivalent car cannot be purchased today - then the consumer who could only afford the 1990 accord will instead buy used. Is this person going to feel wealthier than they did in 1990?
        MontyCarloHall 5y ago
        > The BLS can simply say the price increase is due to enhancements. Hedonic regression actually quantifies the expected year-over-year price changes due to quality changes. It doesn’t give automakers carte blanche to increase prices, because a year-over-year price increase without quality increases commensurate with previous years will increase the residuals of the regression prediction for the current year. > Is this person going to feel wealthier than they did in 1990? Yes, because a 10 year old car in 2021 is still leaps and bounds better than a 1990 equivalent new car. Drive a few miles in a 2010 Civic (an entry level car), then drive a few miles in a 1990 Accord (a midrange car). You’ll be amazed at how much better the 10 year old Civic is in every aspect.
- deleted 5y ago
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542458 5y ago
“Car prices are not evaluated in a way I agree with” is a very different argument from “Cars prices aren’t evaluated at all”.
ahahahahah 5y ago
Whatever you think of the validity of "hedonic adjustments" doesn't really matter as far as cars are concerned because the BLS doesn't apply hedonic adjustments to car prices.
- MontyCarloHall 5y ago
  Yes they do: https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf
  - gruez 5y ago
    that says quality adjustments, not hedonic adjustments.
    - MontyCarloHall 5y ago
      Aren’t “quality adjustments” by definition “hedonic adjustments”? How are these not hedonic adjustments? From the linked PDF: “BLS adjusts for structural and engineering quality changes such as: • Changes that affect the safety of occupants of the vehicle as mandated by legislated federal or state standards, and for purposes of IPP export items, applicable foreign market standards. Changes in safety features not required by legislated standards will be evaluated on a case-by-case basis. • Changes in mechanical or electrical features that affect the overall operation or efficiency of the vehicle, or the ability of a component to perform its function, such as changes affecting steering, braking, stability, engine horsepower, traction control, transmission, battery life, and fuel systems and/or electrical systems. • Changes in design or materials that affect the length of service, durability, need for repairs, or strength or performance of the item, such as stronger bumpers, HID headlamps, flexible body panels, platinum-tipped spark plugs, or warranty changes. • Changes that affect comfort or convenience, if supported by evidence of a functional or software improvement, such as redesigned seat belts, remote door locks, theft deterrent systems, navigation and communication systems, satellite radio hardware, drive assist systems, backup cameras, sensors or changes in storage capacity.”
mcguire 5y ago
"Quality adjustments are based on costs provided by manufacturers in categories such as reliability, durability, safety, fuel economy, maneuverability, speed, acceleration/deceleration, carrying capacity, and comfort or convenience. Adjustments are also made when equipment is added or deleted from the tracked model. Adjustments are not made for changes in gasoline content due to mandated air quality requirements. Additional information is available in the Guidelines for Quality Adjustment of New Vehicles Prices document." (https://www.bls.gov/cpi/factsheets/new-vehicles.htm https://www.bls.gov/cpi/factsheets/new-vehicles.htm) The Guidelines for Quality Adjustment of New Vehicle Prices are at https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf. New Vehicle CPI has increased 22% since 1990 (https://data.bls.gov/pdq/SurveyOutputServlet https://data.bls.gov/pdq/SurveyOutputServlet).
nly 5y ago
Cars, like homes, live in a debt market. I can't speak for the US but here in the UK more than 90% of new, private car registrations are supported by purchases made on finance[0]. High car and house prices are what you get when you have unprecedented close-to-zero interest rates for this long. Prices = f(interest rates, affordability) [0] https://www.fla.org.uk/media/facts-and-figures/ https://www.fla.org.uk/media/facts-and-figures/
- namdnay 5y ago
  > I can't speak for the US but here in the UK more than 90% of new, private car registrations are supported by purchases made on finance I would be wary of this statistic, because it could just mean that only people with leasing plans are buying new cars, and everyone else is buying the cars coming out of lease (which makes sense financially, a car loses something like 30% of its value in the first two years?)

stretchwithme 5y ago

If by FUD you mean doubt in the validity of government statistics, you are correct. But deceptive things should be doubted.

a-posteriori 5y ago

Why is questioning the CPI methodology FUD?

fanciestManimal 5y ago
The claim was incorrect. They are included. That's fundamentally different than claiming some kind of issue with how this information is calculated for cars.
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