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If the last time you looked was last year, then yeah. They went up this year. What’s misleading about reporting yearly percentage increases in prices? I’m baff
by dcow 4y ago
If the last time you looked was last year, then yeah. They went up this year.
What’s misleading about reporting yearly percentage increases in prices? I’m baffled.
- ncallaway 4y agoI don’t think anyone was saying it was misleading, rather they were pointing at a nuance of the data.
- unethical_ban 4y agoSigh. The YoY is useful for businessmen and economists. People aren't checking their statements for milk prices from Nov 2021 right now. They just know "man it jumped up". The point is that the everyday person cares about jumps and trends, and hearing "20% YoY increase" for 12 months is misleading to someone not thinking about it in economists' terms. The fact a bunch of people here are debating what it means and how to interpret it proves my point.
- macksd 4y agoAnd yet that's the same kind of distinction that you need to understand to be able to make decisions about household debt. If we're honestly at the point where this is considered too confusing for the masses, I think I've stopped thinking democracy is a good idea.
- mlyle 4y agoIf there's a true step change that happens once (and nothing else), inflation looks like: 0% 0% 0% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% 0% 0% 0% If there's a .8% price increase per month, every month, it looks like: +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% The upside of reporting this way: * Seasonal effects are (mostly) removed The downside: * You have to have a lot of context about surrounding numbers to try and distinguish between these scenarios. * The drop from +10% to 0% is not related proximally at all to the real change. * Even if you are careful in interpretation, information and context are removed. It's not very user friendly or useful as a single number to get an idea about what's happening with prices now. > If we're honestly at the point where this is considered too confusing for the masses, I think I've stopped thinking democracy is a good idea. I have a lot of knowledge about economics and mathematics, and it's frequently confusing for me and difficult to tease out what's really happening with prices from a couple of macroeconomic aggregates. If that makes you give up on democracy, uh, so be it.
- danielmarkbruce 4y agoAnd it's not even a theoretical issue. Look at the energy component of CPI. And then consider how that flows through to food and transportation. It is very possible that the vast majority of what we are seeing is the result of a big jump in energy prices over a few months, 8-10 months ago.
- mlyle 4y ago> Look at the energy component of CPI. And then consider how that flows through to food and transportation. It is very possible that the vast majority of what we are seeing is the result of a big jump in energy prices over a few months, 8-10 months ago. Well, that makes it even worse, the "flow through" you're describing from prices increasing because an input price increased. That spreads the initial shock over a longer term. But the effect I'm describing shows up even if it's just a single good that steps once. What's measured in the YoY inflation number is a convolution/FIR filter of 12 months of changes.
- MobiusHorizons 4y agoThe misleading bit would be reporting yoy price increases every month. Still not necessarily misleading to someone trained in reading this data, but the average lay person would probably interpret yoy statistics reported monthly incorrectly when comparing adjacent months
- dcow 4y agoWho’s doing that?
- Dylan16807 4y agoEveryone. Just about every report is talking about how the yoy numbers are changing each month.
- danielmarkbruce 4y agoYou appear to be saying: factually reported data cannot be misleading. This is wrong, but so obviously so that you must be making another point?
- dcow 4y agoMisleading implies the data has some agency. Data cannot be misleading. People can make whatever conclusions they want based on data at hand and it’s just bad analysis if it’s wrong. The data didn't mislead them.
- Dylan16807 4y agoThat data was picked by someone out of all the data in the world. That's where the agency is.
- lupire 4y agoA Federal agency: BLS.
- UncleMeat 4y agoSort of. BLS also publishes other numbers. Media outlets choose which one to report. Consider how last month everybody was reporting Core-CPI because it was higher than overall CPI and therefore produced more urgent sounding headlines whereas earlier in the year when overall CPI was higher that was the reported number. Yes, headlines said "Core-CPI" last month but if you aren't careful you get a very incomplete picture of things.
- danielmarkbruce 4y agoWeird take. Most will agree "deliberately misleading" is what you are talking about.
- UncleMeat 4y agoImagine a more extreme case where we reported inflation over the past 50 years each month. Every month we compute the price of the basket 50 years ago and the price of the basket today and compare. This number would go up when the most recent month had more price increases than the month 601 months ago. It would go down when the situation was reversed. It would be a number, but it would tell you very little useful information. It is also the case that going extreme in the other direction is ridiculous. Imagine a daily inflation measure. Also nearly useless. "Oh, prices were flat today so everything is fine." Published inflation numbers in media are usually used to make either the claim "everything is fucked, you should be mad about public policy" or "everything is fine, you should be happy about public policy." To me, this means that the reported should ideally be tied to some cadence that matches public policy. I'm not sure what that cadence is.