3 ms·
Reminder: Inflation is a vector, not a scalar. Ignore the abstraction at your own risk. Inflation is the rise in price of every single item for sale across a m
by mikewarot 4y ago
Reminder: Inflation is a vector, not a scalar. Ignore the abstraction at your own risk.
Inflation is the rise in price of every single item for sale across a market, not just the "basket" of goods selected to be a good example, and subject to adjustment and correction over time.
It is entirely possible that inflation that averages out to 10% for a year may double the cost of living for some people, and actually make things cheaper for others.
- mdemare 4y agoPlease explain.
- alexanderchr 4y agoIt’s another way of saying that inflation has many components and that the reported number is just a mean of those, with the additional benefit that it makes you look smart.
- electrondood 4y agoElaborate? The difference is direction. Are you just warning about deflation?
- snapcaster 4y agoI think the comment you're responding to is more pointing out that it is made up of many different components (a high dimensional vector)
- neuronexmachina 4y agoAs an example, look at table A in the bls.gov release. Each column is a roughly 20-dimensional vector, with both positive and negative components. Positive components (those which had price increases in the past month) include food and shelter, while negative components include energy/gasoline, used cars, and medical care.
- crazygringo 4y agoI'm racking my brain to try imagine what you could possibly mean, and I've got nothing. Scalars are 1-dimensional. Inflation is very much a one-dimensional number, ranging from positive to negative. Vectors have 2 or more dimensions, interpretable as a scalar with a rotational direction. So how would that describe inflation exactly...? And if you're trying to say that inflation changes over time, that doesn't turn it into a vector. That's just a scalar time series.
- rendang 4y agoI believe the point is that the price of each individual good or service is a dimension. They all can move independently of one another, CPI is just an estimate of the total effect of inflation by using a weighted sample of particular items.
- twic 4y agoIf the price of tacos doubles, and the price of toilet paper halves, in a universe with only those two commodities, what is inflation? It's (2, 0.5). You could turn this into a scalar if you want to. But you have to throw away information to do so. Or, to put it another way, you have to select a subset of the information. You can't interpret the inflation vector as a direction, because inflation space is not a metric space (or something - the particular genre of vector spaces where geometric concepts are meaningful).
- DonsDiscountGas 4y agoRealistically, if there are goods that are deeply important to somebody, they will already be tracking that price. For most people that will be housing.