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I thought some of the opacity of the CPI process was meant to stop people (outside the government, at least) from being able to manipulate it. It's plausible to
by schoen 5y ago
I thought some of the opacity of the CPI process was meant to stop people (outside the government, at least) from being able to manipulate it. It's plausible to worry that people inside the government will be more able to manipulate it as a result, but I wonder how mindful the developers of this new index have been of Goodhart's Law.
Apparently there's some incentive to manipulate inflation statistics not only for political reasons (like to convince people that a particular government is doing a good or bad job, or that a particular economy is strong or weak) but also for financial reasons (if things have been indexed to that measurement through policies, laws, or contracts, or perhaps some financial instruments that take account of them in a way that represents a bet on the inflation rate).
So, if they're transparent enough about where they get the prices that feed this index, perhaps someone could try to manipulate those prices at particular moments in order to influence where the index goes.
(I do like the idea of more objective and independent inflation measurements.)
Are the developers (and Balaji Srinivasan) really literally worried about someone trying to censor their index? Is there any case in the U.S. where people have been prevented from gathering and reporting on price data? I do think that happens or has happened in a number of countries -- I seem to remember that the Argentine government has been especially sensitive about economic data -- but is it credible that this will spread elsewhere, and not be treated as a clear-cut free expression idea?