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If you talk to a random person, they will say inflation since 2020 has been ~30%. If you ask the government, its 15%. The only way I can rationalize this is t

If you talk to a random person, they will say inflation since 2020 has been ~30%. If you ask the government, its 15%. The only way I can rationalize this is that CPI is a lagging number. But deep down, I know its a gamed number.

NotYourLawyer 3y ago
Of course it’s gamed. The government has motive, means, and opportunity. It would be shocking if it weren’t gamed.
- laidoffamazon 3y ago
  Prepare to be shocked, I guess
- adamhp 3y ago
  The CPI isn't a made up number. It's an average of prices of goods. The government doesn't manipulate prices of goods, at least not directly. Sure, the economy might be gamed by the government and large corporations in general, but the Consumer Price Index isn't (and can't really be) directly manipulated, without changing its definition (what is included in the index).
- SantalBlush 3y ago
  Most of government is comprised of bureaucrats who do their jobs through many administrations. This take shows a complete misunderstanding of government work.
  - NotYourLawyer 3y ago
    Now who’s being naive…
    - SantalBlush 3y ago
      I worked for the government, so I can confidently say that you are.
bryanlarsen 3y ago
Remember that when you're cumulating percentages to multiply rather than add. The official inflation since 2020 is 20%, not 15%.
- hospitalJail 3y ago
  Thank you for the correction, that was my mental math + my memory doing 1.12* 1.01*1.02.
Symmetry 3y ago
Why do you think it's a gamed number? The official US inflation numbers correspond pretty well to outside efforts to measure them like the Billion Prices Project. Not perfectly with any one official price index but the US publishes a ton of them using different baskets of goods and different methodologies so that isn't surprising. But not systematically off in any particular direction either.
adamhp 3y ago
How would one game the CPI? A price index is just an average of the prices of a bunch of different goods. We have pretty hard data on the prices of goods. People likely think inflation is higher because they purchase more of a particular good that has significantly increased. Used cars, for example, accounted for almost a third of the inflation measure in 2021.
- thworp 3y ago
  You answered your own question, one of the ways is to "adjust for consumer preferences" the goods baskets You can also change the weights for various localities or overstate how much better the new version of a product is and reduce its weight. Fundamentally the BLS in the US has no incentive to accurately report inflation. They are a department of the executive with no real safeguards against political influence. Reducing the official CPI reduces the government's expenditure and understating inflation is a great way to do so without officially cutting any budget item. Further, see my sister comment to yours, inflation is personal, a country-wide single-number inflation measure is broken by design.
  - adfgadfhion 3y ago
    [dead]
- TexanFeller 3y ago
  > How would one game the CPI? A price index is just an average of the prices of a bunch of different goods. - They have changed what goods are thrown in the basket and in what proportion repeatedly. - They have made adjustments, or when they haven't they arguably should, for variation in quality of goods since for example any TV you buy now is higher quality than anything available in 1990. You don't have the option of buying the previous quality anymore though. - It's a bit murky how to account for substitutions over time such as people buying Impossible burgers instead of beef. Many of the adjustments they consider are completely reasonable but involve subjective and game-able choices which makes the measure hard to trust at face value.
  - 3y ago
thworp 3y ago
It is certainly gamed, but maybe not in the way you mean it. The fundamental issue is that every agent in the economy has their own price index, condensing this into a single number is impossible without losing almost all the information. Essentially, inflation is a field like air pressure (Eric Weinstein put it this way). Even if the weights and items baskets in the various categories were chosen with the best intentions it would not match anybody's experience. It would be like saying the weather in the US tomorrow will be 1056. On top of that there is almost certainly a lot of "adjusting" of the weights and item baskets, the organizations producing the statistics have no incentives not to.
adfgadfhion 3y ago
The public is wrong about a lot of things, especially when some of the richest and most powerful people in the country have systematically deceived them for years. The public thinks inflation is a crisis despite all evidence to the contrary because certain politicians and pundits keep shrieking about it.

NotYourLawyer 3y ago

Of course it’s gamed. The government has motive, means, and opportunity. It would be shocking if it weren’t gamed.

laidoffamazon 3y ago
Prepare to be shocked, I guess
adamhp 3y ago
The CPI isn't a made up number. It's an average of prices of goods. The government doesn't manipulate prices of goods, at least not directly. Sure, the economy might be gamed by the government and large corporations in general, but the Consumer Price Index isn't (and can't really be) directly manipulated, without changing its definition (what is included in the index).
SantalBlush 3y ago
Most of government is comprised of bureaucrats who do their jobs through many administrations. This take shows a complete misunderstanding of government work.
- NotYourLawyer 3y ago
  Now who’s being naive…
  - SantalBlush 3y ago
    I worked for the government, so I can confidently say that you are.

bryanlarsen 3y ago

Remember that when you're cumulating percentages to multiply rather than add. The official inflation since 2020 is 20%, not 15%.

hospitalJail 3y ago
Thank you for the correction, that was my mental math + my memory doing 1.12* 1.01*1.02.

Symmetry 3y ago

Why do you think it's a gamed number? The official US inflation numbers correspond pretty well to outside efforts to measure them like the Billion Prices Project. Not perfectly with any one official price index but the US publishes a ton of them using different baskets of goods and different methodologies so that isn't surprising. But not systematically off in any particular direction either.

adamhp 3y ago

How would one game the CPI? A price index is just an average of the prices of a bunch of different goods. We have pretty hard data on the prices of goods. People likely think inflation is higher because they purchase more of a particular good that has significantly increased. Used cars, for example, accounted for almost a third of the inflation measure in 2021.

thworp 3y ago
You answered your own question, one of the ways is to "adjust for consumer preferences" the goods baskets You can also change the weights for various localities or overstate how much better the new version of a product is and reduce its weight. Fundamentally the BLS in the US has no incentive to accurately report inflation. They are a department of the executive with no real safeguards against political influence. Reducing the official CPI reduces the government's expenditure and understating inflation is a great way to do so without officially cutting any budget item. Further, see my sister comment to yours, inflation is personal, a country-wide single-number inflation measure is broken by design.
- adfgadfhion 3y ago
  [dead]
TexanFeller 3y ago
> How would one game the CPI? A price index is just an average of the prices of a bunch of different goods. - They have changed what goods are thrown in the basket and in what proportion repeatedly. - They have made adjustments, or when they haven't they arguably should, for variation in quality of goods since for example any TV you buy now is higher quality than anything available in 1990. You don't have the option of buying the previous quality anymore though. - It's a bit murky how to account for substitutions over time such as people buying Impossible burgers instead of beef. Many of the adjustments they consider are completely reasonable but involve subjective and game-able choices which makes the measure hard to trust at face value.
- 3y ago

thworp 3y ago

It is certainly gamed, but maybe not in the way you mean it. The fundamental issue is that every agent in the economy has their own price index, condensing this into a single number is impossible without losing almost all the information. Essentially, inflation is a field like air pressure (Eric Weinstein put it this way). Even if the weights and items baskets in the various categories were chosen with the best intentions it would not match anybody's experience. It would be like saying the weather in the US tomorrow will be 1056. On top of that there is almost certainly a lot of "adjusting" of the weights and item baskets, the organizations producing the statistics have no incentives not to.

adfgadfhion 3y ago

The public is wrong about a lot of things, especially when some of the richest and most powerful people in the country have systematically deceived them for years. The public thinks inflation is a crisis despite all evidence to the contrary because certain politicians and pundits keep shrieking about it.