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I agree in general about the hedonic adjustments and their potential for manipulation or miscalculation. But automobiles are probably the worst example! Toyota

I agree in general about the hedonic adjustments and their potential for manipulation or miscalculation. But automobiles are probably the worst example! Toyota didn't even roll out passenger side airbags until 1998. Only the driver had them prior to this. The new Corolla has 8 airbags. Today we have better fuel efficiency, collision protection, driver assistance, remote start... Even the seats are more comfortable. Not to mention most car brands have much better warranties today than they did in the '90s. Other things get hedonic adjustments but shouldn't. Shirts for instance.

lend000 4y ago
But it's irrelevant when that's the cheapest new vehicle, most working Americans need a car, and despite better fuel efficiency, it isn't really that much cheaper to own a car. Hedonic adjustments make sense in theory, but in practice it's a loophole to make inflation whatever the government wants it to be. In the case of vehicles, they clearly went overboard. The counterargument to hedonic adjustments is that almost everything should become cheaper over time, including all vehicle parts and assembly, due to technological progress in manufacturing. I don't think it's unreasonable to assume hedonic adjustments should cancel out increases in manufacturing technology and just ignore them both, probably resulting in a simpler AND more accurate CPI.
- RC_ITR 4y ago
  > But it's irrelevant when that's the cheapest new vehicle, most working Americans need a car, and despite better fuel efficiency, it isn't really that much cheaper to own a car. Hedonic adjustments make sense in theory, bpractice it's a loophole to make inflation whatever the government wants it to be. The average new car in the US lasts like 2x longer than it did in 1998. Shouldn’t that factor in?
  - symlinkk 4y ago
    No
  - spaetzleesser 4y ago
    “The average new car in the US lasts like 2x longer than it did in 1998. Shouldn’t that factor in?” Absolutely not. Where do you stop with this game? Do you factor in that the seats are better so people go less to the doctor for back pain?
    - thfuran 4y ago
      Yes, that sounds like a good idea if what you're trying to estimate is the cost of maintaining a certain quality of life.
      - spaetzleesser 4y ago
        If you push this far enough then you can argue inflation away from almost anything.
        thfuran 4y ago
        So what? The goal of measuring inflation isn't to compute the biggest, scariest number, it's to track changes over time.
    - RC_ITR 4y ago
      “I pay $30k for something I have to buy once every 10 years and that is ‘inflation’ vs. paying $20k for something I have to buy every 5 years” I mean, I really struggle to follow your logic. If a paper towel roll has 2x the sheets but costs 1.5x more, is that inflation too?
      - spaetzleesser 4y ago
        A lot of people buy a car every n years. For them it doesn’t matter if it lasts longer. How do you quantify how much longer cars last? Maybe people use them longer because cars are better or maybe they use them longer because they can’t afford new cars. The paper towel is a bad example because you clearly can quantify the number of sheets. It gets more tricky if you say new paper towels are more absorbent so you need less so there is no inflation although the sheet costs more. How do you measure that? These metrics are way too easy to be gamed. Next is apples costing twice as much but they are crunchier so no inflation?
marvin 4y ago
If anything, shirts should get negative hedonic adjustments as the quality of the fabrics and craftmanship decrease. But I’m guessing negative hedonic adjustments isn’t a thing.
- EVa5I7bHFq9mnYK 4y ago
  Yeah, like many other things. Tomatoes of today do not smell and have no taste. Nobody would buy such tomatoes 40 years ago even for half the price.

lend000 4y ago

But it's irrelevant when that's the cheapest new vehicle, most working Americans need a car, and despite better fuel efficiency, it isn't really that much cheaper to own a car. Hedonic adjustments make sense in theory, but in practice it's a loophole to make inflation whatever the government wants it to be. In the case of vehicles, they clearly went overboard. The counterargument to hedonic adjustments is that almost everything should become cheaper over time, including all vehicle parts and assembly, due to technological progress in manufacturing. I don't think it's unreasonable to assume hedonic adjustments should cancel out increases in manufacturing technology and just ignore them both, probably resulting in a simpler AND more accurate CPI.

RC_ITR 4y ago
> But it's irrelevant when that's the cheapest new vehicle, most working Americans need a car, and despite better fuel efficiency, it isn't really that much cheaper to own a car. Hedonic adjustments make sense in theory, bpractice it's a loophole to make inflation whatever the government wants it to be. The average new car in the US lasts like 2x longer than it did in 1998. Shouldn’t that factor in?
- symlinkk 4y ago
  No
- spaetzleesser 4y ago
  “The average new car in the US lasts like 2x longer than it did in 1998. Shouldn’t that factor in?” Absolutely not. Where do you stop with this game? Do you factor in that the seats are better so people go less to the doctor for back pain?
  - thfuran 4y ago
    Yes, that sounds like a good idea if what you're trying to estimate is the cost of maintaining a certain quality of life.
    - spaetzleesser 4y ago
      If you push this far enough then you can argue inflation away from almost anything.
      - thfuran 4y ago
        So what? The goal of measuring inflation isn't to compute the biggest, scariest number, it's to track changes over time.
  - RC_ITR 4y ago
    “I pay $30k for something I have to buy once every 10 years and that is ‘inflation’ vs. paying $20k for something I have to buy every 5 years” I mean, I really struggle to follow your logic. If a paper towel roll has 2x the sheets but costs 1.5x more, is that inflation too?
    - spaetzleesser 4y ago
      A lot of people buy a car every n years. For them it doesn’t matter if it lasts longer. How do you quantify how much longer cars last? Maybe people use them longer because cars are better or maybe they use them longer because they can’t afford new cars. The paper towel is a bad example because you clearly can quantify the number of sheets. It gets more tricky if you say new paper towels are more absorbent so you need less so there is no inflation although the sheet costs more. How do you measure that? These metrics are way too easy to be gamed. Next is apples costing twice as much but they are crunchier so no inflation?

marvin 4y ago

If anything, shirts should get negative hedonic adjustments as the quality of the fabrics and craftmanship decrease. But I’m guessing negative hedonic adjustments isn’t a thing.

EVa5I7bHFq9mnYK 4y ago
Yeah, like many other things. Tomatoes of today do not smell and have no taste. Nobody would buy such tomatoes 40 years ago even for half the price.