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Some notable "adjustments" that are made when computing the CPI: * using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/

Some notable "adjustments" that are made when computing the CPI: * using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... * factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component * substituting goods to account for substitution bias (https://www.frbsf.org/economic-research/publications/economic-letter/1999/february/a-better-cpi/#:~:text=Substitution%20bias%20occurs%20because%20the,changes%20of%20goods%20and%20services https://www.frbsf.org/economic-research/publications/economi....). Substituting chicken for beef was heavily criticized.

alisonkisk 5y ago
1 is correct because your house will sell for more later. 2 is incorrect and an obvious scam that uses societal progress to cover up inflating the money supply. (A virtual tax on progress). 3 is 2 but sort of in reverse.
spaetzleesser 5y ago
“ factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component” I guess you could also make increases in health care costs go away with this approach. It’s way more expensive than 20 years ago but the tech is way better so it’s actually cheaper.
- mcguire 5y ago
  You could, but you would be better off by quantifying health care quality by life expectancy.
gruez 5y ago
>* using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... makes sense, considering that most people own their homes, aren't exposed to the housing market, and aren't buying houses every month. >* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component Why do you have to get the flagship phone? Why not get a low end phone today, that has about the same capabilities/speed as the phone you had 5 years ago?
- Enginerrrd 5y ago
  It's not about WHY you "have to" get a flagship phone. It's about the fact that the flagship phone is 20% more expensive than it was 5 years ago, yet that isn't counting toward inflation with the CPI. Christ, we could use a standard of computation from a 1980's calculator and REALLY offset rising food prices. Hence the gamesmanship. Maybe I can offset the rising cost of my food basket by switching out to lower quality (or shrunken) goods for the same money, but you can't look me in the eye and tell me I have the exact same buying power as before with the same money.
  - jefftk 5y ago
    The point is that if you want a phone with the capabilities and performance of a good one from five years ago, you can buy that today. It will cost you substantially less (in nominal dollars) today than it would've cost five years ago. How does that not represent a person with a given number of dollars being able to buy more, in this instance?
    - stjohnswarts 5y ago
      No it won't since software will require that additional compute power so I can watch star trek as a 3d hologram.
stjohnswarts 5y ago
I'm not sure where you're getting "technology is deflationary" since I basically need 1 phone at least, doubling it's speed doesn't really give me any more utility for the most part as I, and most people, don't really get any added benefit out of that. It also doesn't let me get by with half a phone, since a half phone is useless.

alisonkisk 5y ago

1 is correct because your house will sell for more later. 2 is incorrect and an obvious scam that uses societal progress to cover up inflating the money supply. (A virtual tax on progress). 3 is 2 but sort of in reverse.

spaetzleesser 5y ago

“ factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component” I guess you could also make increases in health care costs go away with this approach. It’s way more expensive than 20 years ago but the tech is way better so it’s actually cheaper.

mcguire 5y ago
You could, but you would be better off by quantifying health care quality by life expectancy.

gruez 5y ago

>* using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... makes sense, considering that most people own their homes, aren't exposed to the housing market, and aren't buying houses every month. >* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component Why do you have to get the flagship phone? Why not get a low end phone today, that has about the same capabilities/speed as the phone you had 5 years ago?

Enginerrrd 5y ago
It's not about WHY you "have to" get a flagship phone. It's about the fact that the flagship phone is 20% more expensive than it was 5 years ago, yet that isn't counting toward inflation with the CPI. Christ, we could use a standard of computation from a 1980's calculator and REALLY offset rising food prices. Hence the gamesmanship. Maybe I can offset the rising cost of my food basket by switching out to lower quality (or shrunken) goods for the same money, but you can't look me in the eye and tell me I have the exact same buying power as before with the same money.
- jefftk 5y ago
  The point is that if you want a phone with the capabilities and performance of a good one from five years ago, you can buy that today. It will cost you substantially less (in nominal dollars) today than it would've cost five years ago. How does that not represent a person with a given number of dollars being able to buy more, in this instance?
  - stjohnswarts 5y ago
    No it won't since software will require that additional compute power so I can watch star trek as a 3d hologram.

stjohnswarts 5y ago

I'm not sure where you're getting "technology is deflationary" since I basically need 1 phone at least, doubling it's speed doesn't really give me any more utility for the most part as I, and most people, don't really get any added benefit out of that. It also doesn't let me get by with half a phone, since a half phone is useless.