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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.
by lumost 6y 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 6y 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.