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StatCan themselves acknowledge there is no 'standard' way of doing it: * https://old.reddit.com/r/PersonalFinanceCanada/comments/z14pd1/we_are_data_experts_on_

StatCan themselves acknowledge there is no 'standard' way of doing it: * https://old.reddit.com/r/PersonalFinanceCanada/comments/z14pd1/we_are_data_experts_on_the_consumer_price_index/ix9es6a/ https://old.reddit.com/r/PersonalFinanceCanada/comments/z14p... And plenty of folks in Canada think like you do: that the official way Is Wrong and Some Other way should be used—often pointing to the US as the way it should be done. And yet here is someone in the US saying the Canadian way should be the way. ¯\_(ツ)_/¯

ghaff 3y ago
At the end of the day, you have some things that are a huge component of the CoL for some people (housing, car) that are fairly modest for others who have a paid-off mortgage or live in a LCoL area and either don't own a car or drive a paid-off old one. Assuming the inflation of those items differ significantly from a broader basket of goods, there's no way to have a single measure that reasonably represents price increases for the two groups.
saberience 3y ago
Why not just measure "actual" rent values, instead of owners predictions of rent? Is that just crazy talk?
- throw0101b 3y ago
  They do? Under Shelter, the BLS has "Rent of primary residence" and "Owners’ equivalent rent of residences": * https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... This is because some portion of the population are renters and some are owners, so they both need to be reflected.
  - bugglebeetle 3y ago
    Owners equivalent is an insane, distortionary metric here when you can just look at the market data for similar sized properties. No one who was going to rent their house would do a survey of what their neighbors with similar sized homes think they should charge for it. They’d look at what the market rate is for their neighborhood. This is, of course, what property management companies actually do on behalf of owners.
    - throw0101b 3y ago
      The BLS and US CPI moved toward the current system for valid 'technical' reasons because the previous way was agreed upon to be bad: * https://www.bls.gov/opub/mlr/1982/06/art2full.pdf https://www.bls.gov/opub/mlr/1982/06/art2full.pdf Further, there is no internationally agreed upon method for housing/shelter, with pros and cons for each: > International statistical agencies have unanimously adopted the net acquisition approach for durables, but there is no consensus about the best approach to the treatment of OA in the CPI16 (Table 1). Rental equivalence is the most popular approach among countries belonging to the Organisation for Economic Co- operation and Development.17 Johnson’s (2015) recent review of the U.K. CPI proposes using CPIH, which includes the costs of OA and is based on a rental- equivalence approach, as the U.K.’s main measure of inflation. Several countries in the European Union have refrained from incorporating OA into their CPI, although Eurostat is currently conducting a pilot study for the euro area based on the net acquisition approach. Australia and New Zealand use a net acquisition approach, while Sweden and Finland—like Canada—are using a partial user-cost approach. No country has adopted a full-fledged user-cost approach. * https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-review-autumn15-sabourin.pdf https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-r... Seems like any particular system has pros and cons. Someplace else in this thread someone mentioned that Canada's system for Shelter is better, but even StatCan recognizes limitations of what they use: * https://old.reddit.com/r/PersonalFinanceCanada/comments/z14pd1/we_are_data_experts_on_the_consumer_price_index/ix9es6a/ https://old.reddit.com/r/PersonalFinanceCanada/comments/z14p... And plenty of folks in Canada think like you do: that the official way Is Wrong and Some Other way should be used—often pointing to the US as the way it should be done. And yet elsewhere in the thread someone in the US saying the Canadian way should be the way. ¯\_(ツ)_/¯
      - bugglebeetle 3y ago
        You’re completely missing my point: we already have firms who do what the BLS claims to be doing that have greater predictive power and determinative impact on what people play for housing. Ignoring that reality to shrug and go “lots of countries measure things in ways that don’t make any sense so what can you do” is not a refutation of anything.

ghaff 3y ago

At the end of the day, you have some things that are a huge component of the CoL for some people (housing, car) that are fairly modest for others who have a paid-off mortgage or live in a LCoL area and either don't own a car or drive a paid-off old one. Assuming the inflation of those items differ significantly from a broader basket of goods, there's no way to have a single measure that reasonably represents price increases for the two groups.

saberience 3y ago

Why not just measure "actual" rent values, instead of owners predictions of rent? Is that just crazy talk?

throw0101b 3y ago
They do? Under Shelter, the BLS has "Rent of primary residence" and "Owners’ equivalent rent of residences": * https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... This is because some portion of the population are renters and some are owners, so they both need to be reflected.
- bugglebeetle 3y ago
  Owners equivalent is an insane, distortionary metric here when you can just look at the market data for similar sized properties. No one who was going to rent their house would do a survey of what their neighbors with similar sized homes think they should charge for it. They’d look at what the market rate is for their neighborhood. This is, of course, what property management companies actually do on behalf of owners.
  - throw0101b 3y ago
    The BLS and US CPI moved toward the current system for valid 'technical' reasons because the previous way was agreed upon to be bad: * https://www.bls.gov/opub/mlr/1982/06/art2full.pdf https://www.bls.gov/opub/mlr/1982/06/art2full.pdf Further, there is no internationally agreed upon method for housing/shelter, with pros and cons for each: > International statistical agencies have unanimously adopted the net acquisition approach for durables, but there is no consensus about the best approach to the treatment of OA in the CPI16 (Table 1). Rental equivalence is the most popular approach among countries belonging to the Organisation for Economic Co- operation and Development.17 Johnson’s (2015) recent review of the U.K. CPI proposes using CPIH, which includes the costs of OA and is based on a rental- equivalence approach, as the U.K.’s main measure of inflation. Several countries in the European Union have refrained from incorporating OA into their CPI, although Eurostat is currently conducting a pilot study for the euro area based on the net acquisition approach. Australia and New Zealand use a net acquisition approach, while Sweden and Finland—like Canada—are using a partial user-cost approach. No country has adopted a full-fledged user-cost approach. * https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-review-autumn15-sabourin.pdf https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-r... Seems like any particular system has pros and cons. Someplace else in this thread someone mentioned that Canada's system for Shelter is better, but even StatCan recognizes limitations of what they use: * https://old.reddit.com/r/PersonalFinanceCanada/comments/z14pd1/we_are_data_experts_on_the_consumer_price_index/ix9es6a/ https://old.reddit.com/r/PersonalFinanceCanada/comments/z14p... And plenty of folks in Canada think like you do: that the official way Is Wrong and Some Other way should be used—often pointing to the US as the way it should be done. And yet elsewhere in the thread someone in the US saying the Canadian way should be the way. ¯\_(ツ)_/¯
    - bugglebeetle 3y ago
      You’re completely missing my point: we already have firms who do what the BLS claims to be doing that have greater predictive power and determinative impact on what people play for housing. Ignoring that reality to shrug and go “lots of countries measure things in ways that don’t make any sense so what can you do” is not a refutation of anything.