5 ms·

Isn't CPI politicized and doesn't accurately account for real cost of living changes? Why do you think CPI is a better measure?

by cwkoss 5y ago

mlyle 5y ago
> Isn't CPI politicized and doesn't accurately account for real cost of living changes? CPI ain't perfect. Anyone can argue about the compensation of the basket and make points that it might understate some portions of household spending. And then there's confounds in the opposite direction: it doesn't take into account hedonics at all really. But it's not terrible, either: it's the best measure we have. > Why do you think CPI is a better measure? See sibling comments. If CPI doesn't quite accurately report purchasing power... M3 is nowhere close as a metric.
- itsdrewmiller 5y ago
  Hedonics are one of the best arguments against CPI - https://wolfstreet.com/2019/12/05/what-worries-me-about-hedonic-quality-adjustments-cpi/ https://wolfstreet.com/2019/12/05/what-worries-me-about-hedo... This M3 nonsense is ridiculous though, I agree.
  - mlyle 5y ago
    Hedonics (which I had mentioned) are an inescapable confound. We can't go back and live in 1990 with 1990s goods. The cost of an equivalent quality of life (by our best reckoning) is measured in the various CPI. But people expecting more in life (safer products, more computing, etc) isn't exactly "inflation". And if we treat increases in quality of life as an increase of cost of living, we're really measuring something else.
JumpCrisscross 5y ago
> Isn't CPI politicized and doesn't accurately account for real cost of living changes? There isn't a single CPI. Headline CPI is widely reported because it's approximately right for most people. If you're doing inflation-sensitive planning, you should be using a more fine-grained metric. Predicting your personal cost of living changes using national core CPI is like aiming a gun with a compass. (That said, most people--when discussing inflation--aren't doing anything practical with it. For conversational purposes, headline is fine.)

Isn't CPI politicized and doesn't accurately account for real cost of living changes? Why do you think CPI is a better measure?

by cwkoss 5y ago

Isn't CPI politicized and doesn't accurately account for real cost of living changes? Why do you think CPI is a better measure?

mlyle 5y ago

> Isn't CPI politicized and doesn't accurately account for real cost of living changes? CPI ain't perfect. Anyone can argue about the compensation of the basket and make points that it might understate some portions of household spending. And then there's confounds in the opposite direction: it doesn't take into account hedonics at all really. But it's not terrible, either: it's the best measure we have. > Why do you think CPI is a better measure? See sibling comments. If CPI doesn't quite accurately report purchasing power... M3 is nowhere close as a metric.

itsdrewmiller 5y ago
Hedonics are one of the best arguments against CPI - https://wolfstreet.com/2019/12/05/what-worries-me-about-hedonic-quality-adjustments-cpi/ https://wolfstreet.com/2019/12/05/what-worries-me-about-hedo... This M3 nonsense is ridiculous though, I agree.
- mlyle 5y ago
  Hedonics (which I had mentioned) are an inescapable confound. We can't go back and live in 1990 with 1990s goods. The cost of an equivalent quality of life (by our best reckoning) is measured in the various CPI. But people expecting more in life (safer products, more computing, etc) isn't exactly "inflation". And if we treat increases in quality of life as an increase of cost of living, we're really measuring something else.

JumpCrisscross 5y ago

> Isn't CPI politicized and doesn't accurately account for real cost of living changes? There isn't a single CPI. Headline CPI is widely reported because it's approximately right for most people. If you're doing inflation-sensitive planning, you should be using a more fine-grained metric. Predicting your personal cost of living changes using national core CPI is like aiming a gun with a compass. (That said, most people--when discussing inflation--aren't doing anything practical with it. For conversational purposes, headline is fine.)