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> The Consumer Price Index is a scam at this point, as far as I can tell. The BLS goes into excruciating detail about their methodology, which is not something

> The Consumer Price Index is a scam at this point, as far as I can tell. The BLS goes into excruciating detail about their methodology, which is not something often find scams doing. The Consumer Price Index is just that, an index. It seeks to distill the complexities of the consumer economy into a single number, and to do so reliably over time. It's impossible to do this without a whole bunch of compromises and trade offs. It's trivial to rip apart any such methodology because of these trade offs - just find a trade off you don't agree with and argue it should be the opposite. If someone attempted to make a t-shirt using the weighted dimensions of every American, the result would be a t-shirt size that would not fit any individual. But, over time, that t-shirt could be used to understand changes to the American physiology over time. > For example, they attention to adjust the new price to account for what they consider to be added value. They cover this in their FAQ [1]. But again, this is a trade off. If laundry detergent becomes more concentrated, thus can do 20% more loads for 10% more price, then how should that be handled? If $1000 Nike shoes become popular, does that mean that the price of shoes increased 10x even if cheaper alternatives are still the same price? [1] https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...

bugglebeetle 3y ago
The BLS methodology is certainly “elaborate.” But as is pointed out down-thread, the CPI uses completely bizarre measures and makes little attempt to source data from the kind of places that would typically be used to do these analysis were more rigor being demanded or actual money was riding on them being correct. https://news.ycombinator.com/item?id=37895252 https://news.ycombinator.com/item?id=37895252
- creer 3y ago
  A lof of actual money rides on CPI measures. For example social security payments are indexed. Which is one of plenty of strong incentives to keep the "measurements" low.
  - nradov 3y ago
    Is there any actual evidence of BLS personnel being pressured to keep their measurements low?
    - creer 3y ago
      BLS is part of a large organization. Specifically it's part of the United States Department of Labor (DOL), one of departments of the executive branch. I haven't yet heard of a government with an incentive to find a high inflation number. (And if it were an "independent" agency like statistics are in some countries, that would provide more shielding but not necessarily perfect either.) Asking for specific evidence of a specific BLS personel filing a grievance or similar because of pressure is placing the bar way into the "blind" territory. This is not how influence works. I mean sometimes it is and we get to see it laundered in public, but that's not the common way. In the case of BLS it may be there, I haven't searched. Oh hey, there is someone who got caught with his hand in the cookie jar: https://www.washingtonpost.com/archive/politics/1988/09/11/bush-associate-under-nixon-surveyed-jews-in-bls/061216e0-6423-4efa-adcc-47bc2453df85/ https://www.washingtonpost.com/archive/politics/1988/09/11/b... As usual what would help is ever more work from the producers to justify their work. BLS comes short. They are not the only ones but still.
      - nradov 3y ago
        So you are insinuating something but have no actual evidence. Just another baseless conspiracy theory.
fatherzine 3y ago
'excruciating detail [...], which is not something often find scams doing' Except for e.g. the small print in an EULA, or the XXXX pages Congress spending bills. There is definitely a bureaucratic technique of 'obfuscate through sheer volume of irrelevant information'.
- 2devnull 3y ago
  Who hasn’t done this. And now gpt can do it for us, for greater obfuscation at lower cost.
- nradov 3y ago
  Which details of the CPI methodology do you think are irrelevant and should be omitted?
  - fatherzine 3y ago
    Scoping to food CPI to simplify the conversation, provided a link to the actual raw data, e.g. prices & relative weights over time (do you have such a link?), how do I sift through it to answer elementary questions about the cost trajectory of the daily caloric intake, with geographic and socioeconomic breakdown. On top of my head: * basic breakdown: grains, meat, veggies * processed vs. unprocessed * grocery sourced vs. eating out, largely fast food * sourcing, binned by log distance travelled * scenarios: Med diet? carnivore? vegetarian? On reflection, the core objection is that there is a subjective hidden parameter: the relative weights of different components. See e.g. https://www.bls.gov/opub/hom/cpi/calculation.htm#item-replacement-and-quality-adjustment https://www.bls.gov/opub/hom/cpi/calculation.htm#item-replac... I'd rather use my own weights.
    - deleted 3y ago
      [deleted]
    - JumpCrisscross 3y ago
      > provided a link to the actual raw data, e.g. prices & relative weights over time (do you have such a link?) Yes [1][2]. [1] https://www.bls.gov/cpi/tables/ https://www.bls.gov/cpi/tables/ [2] https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm
littlestymaar 3y ago
> The Consumer Price Index is just that, an index Except it's not. It's how we calculate inflation, which in turns drives how we measure GDP growth. It's also how we measure productivity and purchasing power variation over time. This measure has a very big impact, including on our assessment of policies and the evolution of the economies of nations. Off course there can be no absolute value for such a thing, but the problem is that economists have been obsessed with “real” prices and disregarding “nominal” values (you'd notice the irony of naming the arbitrarily constructed thing as “real”), and so almost every economic analysis includes CPI and now everything depends on it so its measurement become included everywhere indirectly. And it is in fact a big problem.
deleted 3y ago
[deleted]
creer 3y ago
Your examples cover one of the problems: When the cheaper same old shoe is rarely on the shelf, then what? And are they as enthusiastic at removing value as they are at adding value (i.e. when then "same old" shoe is not same old but faster wearing) They actually do describe this "If the BLS data collector is forced to replace a short-sleeve cotton/poly shirt in the CPI sample with a long sleeve 100% cotton shirt..." but they provide no answer aside from [well the one on the shelf now is better]. So that the buyer of the "common" shoe, shirt or TV pays more. It's easy to argue that it's possible to dig deep and find that "older" cheaper item but that doesn't change that the "basic basket" is now more expensive. The second problem is one of perception - and perception really matters in this case. And CPI doesn't solve that problem.
flagrant_taco 3y ago
The most successful scams actually do go into excruciating detail to appear methodical, that's how you get people to buy in. While I do agree with many of the points you raised, for me those point to the uselessness of the CPI as a matric. If the dataset is so complex you can only boil it down so far before too much context is lost. The CPI is an attempt to create a single number of off the entire economy, a task that is impossible made only more clear by complaints over the obvious and egregious tradeoffs made. Statistics can be useful, it can also be a pointless game of manipulating so much data that you can make it say whatever you want. I think you'd be hard pressed to find an average American that would feel like prices have only gone up by ~4-5% over the last few years.
- JumpCrisscross 3y ago
  > those point to the uselessness of the CPI as a matric Unless you're setting federal policy, it probably is useless to you. For personal forecasting, you're better off using the CPI calculated for your state or metropolitan area. (If you're procuring at a national scale, you're looking at a producer index.)
  - flagrant_taco 3y ago
    CPI plays a huge role in our everyday lives though. From cost of living raises to entitlement programs, it all moves based on inflation numbers and the CPI. The Fed even considers these numbers when watching the economy and deciding on fiscal policy, setting the Fed Funds Rate and impacting interest rates across the board.

bugglebeetle 3y ago

The BLS methodology is certainly “elaborate.” But as is pointed out down-thread, the CPI uses completely bizarre measures and makes little attempt to source data from the kind of places that would typically be used to do these analysis were more rigor being demanded or actual money was riding on them being correct. https://news.ycombinator.com/item?id=37895252 https://news.ycombinator.com/item?id=37895252

creer 3y ago
A lof of actual money rides on CPI measures. For example social security payments are indexed. Which is one of plenty of strong incentives to keep the "measurements" low.
- nradov 3y ago
  Is there any actual evidence of BLS personnel being pressured to keep their measurements low?
  - creer 3y ago
    BLS is part of a large organization. Specifically it's part of the United States Department of Labor (DOL), one of departments of the executive branch. I haven't yet heard of a government with an incentive to find a high inflation number. (And if it were an "independent" agency like statistics are in some countries, that would provide more shielding but not necessarily perfect either.) Asking for specific evidence of a specific BLS personel filing a grievance or similar because of pressure is placing the bar way into the "blind" territory. This is not how influence works. I mean sometimes it is and we get to see it laundered in public, but that's not the common way. In the case of BLS it may be there, I haven't searched. Oh hey, there is someone who got caught with his hand in the cookie jar: https://www.washingtonpost.com/archive/politics/1988/09/11/bush-associate-under-nixon-surveyed-jews-in-bls/061216e0-6423-4efa-adcc-47bc2453df85/ https://www.washingtonpost.com/archive/politics/1988/09/11/b... As usual what would help is ever more work from the producers to justify their work. BLS comes short. They are not the only ones but still.
    - nradov 3y ago
      So you are insinuating something but have no actual evidence. Just another baseless conspiracy theory.

fatherzine 3y ago

'excruciating detail [...], which is not something often find scams doing' Except for e.g. the small print in an EULA, or the XXXX pages Congress spending bills. There is definitely a bureaucratic technique of 'obfuscate through sheer volume of irrelevant information'.

2devnull 3y ago
Who hasn’t done this. And now gpt can do it for us, for greater obfuscation at lower cost.
nradov 3y ago
Which details of the CPI methodology do you think are irrelevant and should be omitted?
- fatherzine 3y ago
  Scoping to food CPI to simplify the conversation, provided a link to the actual raw data, e.g. prices & relative weights over time (do you have such a link?), how do I sift through it to answer elementary questions about the cost trajectory of the daily caloric intake, with geographic and socioeconomic breakdown. On top of my head: * basic breakdown: grains, meat, veggies * processed vs. unprocessed * grocery sourced vs. eating out, largely fast food * sourcing, binned by log distance travelled * scenarios: Med diet? carnivore? vegetarian? On reflection, the core objection is that there is a subjective hidden parameter: the relative weights of different components. See e.g. https://www.bls.gov/opub/hom/cpi/calculation.htm#item-replacement-and-quality-adjustment https://www.bls.gov/opub/hom/cpi/calculation.htm#item-replac... I'd rather use my own weights.
  - deleted 3y ago
    [deleted]
  - JumpCrisscross 3y ago
    > provided a link to the actual raw data, e.g. prices & relative weights over time (do you have such a link?) Yes [1][2]. [1] https://www.bls.gov/cpi/tables/ https://www.bls.gov/cpi/tables/ [2] https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm

littlestymaar 3y ago

> The Consumer Price Index is just that, an index Except it's not. It's how we calculate inflation, which in turns drives how we measure GDP growth. It's also how we measure productivity and purchasing power variation over time. This measure has a very big impact, including on our assessment of policies and the evolution of the economies of nations. Off course there can be no absolute value for such a thing, but the problem is that economists have been obsessed with “real” prices and disregarding “nominal” values (you'd notice the irony of naming the arbitrarily constructed thing as “real”), and so almost every economic analysis includes CPI and now everything depends on it so its measurement become included everywhere indirectly. And it is in fact a big problem.

deleted 3y ago

[deleted]

creer 3y ago

Your examples cover one of the problems: When the cheaper same old shoe is rarely on the shelf, then what? And are they as enthusiastic at removing value as they are at adding value (i.e. when then "same old" shoe is not same old but faster wearing) They actually do describe this "If the BLS data collector is forced to replace a short-sleeve cotton/poly shirt in the CPI sample with a long sleeve 100% cotton shirt..." but they provide no answer aside from [well the one on the shelf now is better]. So that the buyer of the "common" shoe, shirt or TV pays more. It's easy to argue that it's possible to dig deep and find that "older" cheaper item but that doesn't change that the "basic basket" is now more expensive. The second problem is one of perception - and perception really matters in this case. And CPI doesn't solve that problem.

flagrant_taco 3y ago

The most successful scams actually do go into excruciating detail to appear methodical, that's how you get people to buy in. While I do agree with many of the points you raised, for me those point to the uselessness of the CPI as a matric. If the dataset is so complex you can only boil it down so far before too much context is lost. The CPI is an attempt to create a single number of off the entire economy, a task that is impossible made only more clear by complaints over the obvious and egregious tradeoffs made. Statistics can be useful, it can also be a pointless game of manipulating so much data that you can make it say whatever you want. I think you'd be hard pressed to find an average American that would feel like prices have only gone up by ~4-5% over the last few years.

JumpCrisscross 3y ago
> those point to the uselessness of the CPI as a matric Unless you're setting federal policy, it probably is useless to you. For personal forecasting, you're better off using the CPI calculated for your state or metropolitan area. (If you're procuring at a national scale, you're looking at a producer index.)
- flagrant_taco 3y ago
  CPI plays a huge role in our everyday lives though. From cost of living raises to entitlement programs, it all moves based on inflation numbers and the CPI. The Fed even considers these numbers when watching the economy and deciding on fiscal policy, setting the Fed Funds Rate and impacting interest rates across the board.