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>> The figure is slightly misleading An aggregate figure which can’t ever describe inflation as experienced by individuals is only SLIGHTLY misleading? It’s l

>> The figure is slightly misleading An aggregate figure which can’t ever describe inflation as experienced by individuals is only SLIGHTLY misleading? It’s like saying we’re all 32 years old or whatever the average age is. You might resoundingly refute the idea that as a 16 year old or a 96 year old that you’re 32. You’d look aghast as someone gaslights you with “yes we all have different ages thats obvious but its the average that matters, so you’re 32 like everyone else”. But but that’s not the point of ascribing a number to inflation i hear you cry, it’s still a useful construct because it can be compared across countries, it can be compared over time… the model itself can be adjusted to suit particular analysis - RPI, RPI-H, CPI, CPI-H, etc. … to which i can’t help but yawn. The discipline of macro economics has more in common with astrology than science. The answer to any identified weakness is always “more macro economics”. Micro economics is often useful though. Micro = come up with a hypothesis, test it and see if it works. Macro = tell bamboozling campfire stories with the purpose of claiming power and money away from others without having to fight them for it.

JumpCrisscross 3y ago
> like saying we’re all 32 years old or whatever the average age is Yes? This [1] is an important metric if you're running a country? > yes we all have different ages thats obvious but its the average that matters, so you’re 32 like everyone else This isn't a parable about a bad metric. It's one about not reading a good metric wrong. The fool in your story misunderstands how averaging works; that doesn't make every average bad or misleading. > that’s not the point of ascribing a number to inflation i hear you cry, it’s still a useful construct because it can be compared across countries No, it's useful in its proper context. There are a number of metrics because there are, unsurprisingly, a number of questions people ask about prices. PCE is good if you're setting nationwide monetary policy. It's irrelevant to 99% of the contexts it's quoted in. [1] https://www.statista.com/statistics/241494/median-age-of-the-us-population/ https://www.statista.com/statistics/241494/median-age-of-the...
jjk166 3y ago
I think you misunderstand. The GP comment isn't talking about inflation in general being misleading, but the monthly year-over-year change. For your analogy, it's perfectly reasonable to say a population's average age is 32. But it gets muddy when you start comparing the rate of change of the rate of change, so if the age was 31 last month people start extrapolating that we'll all age 12 years in the next 12 months.

JumpCrisscross 3y ago

> like saying we’re all 32 years old or whatever the average age is Yes? This [1] is an important metric if you're running a country? > yes we all have different ages thats obvious but its the average that matters, so you’re 32 like everyone else This isn't a parable about a bad metric. It's one about not reading a good metric wrong. The fool in your story misunderstands how averaging works; that doesn't make every average bad or misleading. > that’s not the point of ascribing a number to inflation i hear you cry, it’s still a useful construct because it can be compared across countries No, it's useful in its proper context. There are a number of metrics because there are, unsurprisingly, a number of questions people ask about prices. PCE is good if you're setting nationwide monetary policy. It's irrelevant to 99% of the contexts it's quoted in. [1] https://www.statista.com/statistics/241494/median-age-of-the-us-population/ https://www.statista.com/statistics/241494/median-age-of-the...

jjk166 3y ago

I think you misunderstand. The GP comment isn't talking about inflation in general being misleading, but the monthly year-over-year change. For your analogy, it's perfectly reasonable to say a population's average age is 32. But it gets muddy when you start comparing the rate of change of the rate of change, so if the age was 31 last month people start extrapolating that we'll all age 12 years in the next 12 months.