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> In other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only. We don't

> In other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only. We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information. On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable. As such, a housing costing x% more today than as compared to some time in the past does not mean that inflation is x%. Again, we only want to know about how the dollar changed in value, not housing. Of course, if you only have numbers, it is impossible to know what share is due to housing being more valuable and what share is the dollar being less valuable, although we can say with great certainty that it is some combination of both. CPI tries to tess out what is the dollar portion only by looking at a large basket of goods of things people buy frequently. Where you see common moment in the change in price across all items in the basket, that is assumed to be the change in value of the dollar. It's not perfect. There is no perfect metric. You are quite right that one should look at many different models, even though none of them will be perfect either. It is all good information, none of it great, but at some point you have to pick a single number. On average, it will be close enough.

Valakas_ 2y ago
>On that note, houses are unquestionably more valuable today. No. They are better, not necessarily more valuable. Simple example: Today you can get a phone with a chip more powerful than the best supercomputers 50 years ago. Is today's chip more valuable (ie. price-value) than that supercomputer? No. An equivalent supercomputer back then would cost WAY more. You're bringing other variables into play and confusing things. Technology has improved, manufacturing costs have gone WAY down for higher quality products. The fact that we can get higher quality things nowadays has little to do with purchasing power and everything to do with science and technology. The fact we can afford a better quality house nowadays, is also much more related to material improvements, manufacturing, logistics, overall system efficiency (transportation, company competition,...) improvements than purchasing power. What we can compare is what other poster's are doing: time vs functions. For example, working time needed to have an average place to live in by the time's standards. And if you do that, you'll see today it requires A LOT more working time.
mistermann 2y ago
> With inflation, we want to know about the change in value of the dollar only. By "we", you are referring to you and others who want to know only this. Some people (not many) want to know what is going on comprehensively, and in fact. For example: I would like to know if there is any strategic changing of formulas to improve appearances going on, like there has been at pretty much every single job I have ever worked on. But to be fair, this is a subjective personal preference, and an unusual one at that. Most people prefer simplistic, memetic representations of reality (though, few can agree on which memes).
- randomdata 2y ago
  > By "we", you are referring to you and others who want to know only this. Right. I am referring to all those who want to know only this, along with everyone else. Because those who want to know something else would use another measure. Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance. Well... duh. > Some people (not many) want to know what is going on comprehensively Absolutely. Which is why we have many different ways to look at inflation. In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work? But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number. CPI is the one we picked to standardize on (but, of course, you can choose another if you want). It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough.
  - mistermann 2y ago
    > Right. I am referring to all those who want to know only this, along with everyone else. "along with everyone else" is incorrect, because you have no way of knowing what other people want (and worse, maybe no way to know that). And the only way you "know" what "all those who want to know only this" is because it is a tautology, it is necessarily true. Though, you have no way of knowing what percentage of the population thinks like you do, so it is not particularly informative knowledge. > Because those who want to know something else would use another measure. Some people (me) would like to see all methodologies maintained indefinitely on a chart, so we can see how different versions of The Truth vary over time. I am interested to see if changes in methodology tend to correlate with changes in the "vibe" of the cost of making ends meet people are experiencing. I prefer this approach because it is more transparent, and because I do not trust my government, or the perceptions of my fellow Westerners (because of the way they think: how it "is", is how it seems to be....which tends to correlate quite nicely with how it is said (repeatedly) to be). > Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance. It is also "like" someone whining about how appliances don't last as long as they used to, but "is likes" are often more misinformative than informative (perhaps why they are so popular?). > Well... duh. Are you blaming others for the way you think? > Absolutely. Which is why we have many different ways to look at inflation. And also why I do not want historic "truth discovery" methodologies memory holed. > In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work? Don't know, but I do not trust them. Also, "in fact" terminating with "?" is a rather interesting approach. > But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number. Maybe we should get better formulas, because reality does not fit so nicely into simple, reductive, misleading models. > CPI is the one we picked to standardize on No, "we" did not pick it, someone else picked it "on our behalf"...according to "democracy" we are trained to believe, though it is not both flawlessly true and not misinformative. > (but, of course, you can choose another if you want). I can't get it published as "fact". > It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough. Good enough to satisfy people that want to be satisfied, but not good enough to satisfy all.
tonymet 2y ago
Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand". We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable. My point is that CPI isn't it, it underestimates true inflation by 3-5x or more , and it interferes with good governance. If the govt wants money from the people, they need to tax them and be held accountable for the policy
- randomdata 2y ago
  > Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand". Regular people understand inflation just fine. How useful it is to them is debatable, but it doesn't have to be for everyone. It's okay if some measurements are only useful to scientists and economists. The measure of the speed of light doesn't mean much in my day to day life either, but we don't have to abolish it because of that. > We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable. I think what most people are looking for is simply cost of living measure. They want to know by how much the costs to live (housing, food, etc.) have increased over inflation. Which we have. But that one might actually be a case of being "too dumb to understand", explaining why it is not commonly put to use. Inflation is, indeed, a much simpler concept. Or it may be that the ultimate cost of living measurement comes from one's own personal accounting records[1], negating the need to reach for any 'universal' perspective. [1] But I suspect most people don't keep any accounting records, so most likely the first one.
  - JumpCrisscross 2y ago
    > what most people are looking for is simply cost of living measure You may have cracked the conundrum right there. People use inflation as a gauge of COL. That is incorrect, but understandable given the lack of a well-publicised national COL metric.
    - randomdata 2y ago
      > People use inflation as a gauge of COL. Which is interesting as you'd think actually living, and incurring the costs that go along with it, would be a much more useful gauge. Probably goes along with my suspicion that most people, especially those not already accounting for business activities, don't keep any meaningful record of their transactions. Hard to calculate COL without data. But at the same time, there isn't much effort in publishing national COL metrics as it is presumed that people will already know their own situation, which is always going to be way more telling. Individual COL can vary widely, even between neighbours, let alone on a national scale.
vineyardmike 2y ago
> houses are unquestionably more valuable today… They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t let survivorship bias fool you - the 1950s homes that working class families had were not that nice. The homes today cost more because more goes into them. We could all live in stuck huts we made ourself like in 1750 and everyone could afford two houses in 2024. Instead, housing has gone up because the utility of that housing has gone up. Oh and of course we’re not making nearly as many per-capita as we used to. So the scarcity is going up.
- cpursley 2y ago
  The increase in housing prices are not at all proportional to these advancements in building techniques and materials.
  - ta1243 2y ago
    Because of the availability of land. There are three costs for housing 1) Materiels 2) Labour 3) Land
  - vineyardmike 2y ago
    It absolutely raises the “floor” of the housing costs - more materials simply means more costs. And the labor to do extra work means more costs - and quality labor is much more expensive today. Same reason a bigger house means more costs. I would posit - admittedly without data - that outside of major metros where land is the clear dominant cost, most costs for housing increase is labor. There are houses and empty lots available within 15min of downtown Cleveland that are selling for <50k. If you go up to $100k, there are dozens of houses. They’re all empty lots or houses that need renovations. If you want a new construction in the same neighborhood, it’s $300k. The cost difference is labor or materials. Obviously Cleveland is a cherry-picked example but I used to live there so I picked my old neighborhood. San Francisco, Boston, Seattle, etc are obviously mostly driven by land costs due to demand and very high incomes.
mrcode007 2y ago
Most of what you have said starting with the definition is incorrect. I suggest you read BLS handbook on methodology.
wakawaka28 2y ago
>On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable. Keep in mind, demand was higher with the baby boom than it is today. Houses also used to be built to much higher specifications. Old houses were made with tons of premium timber that is still valuable even 50+ years later.
- kasey_junk 2y ago
  That is mostly survivor bias and cost of materials difference. We’ve used up most of the stores of large timber causing the price of it to go way up. At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury. As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality.
  - wakawaka28 2y ago
    >At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury. Have you ever seen an old 2x4? This isn't "large beam" but it's obviously higher-quality than new 2x4s. >As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality. There used to be some homes built to low specifications. But most were built super solid. Ductwork, insulation, and just about anything else can easily be upgraded. Compared to classic European houses, ours are temporary trash. >A modern double wide trailer is higher quality. You just discredited yourself there to everyone who knows even a little bit about houses. Go find a 50 year old trailer and see how that looks lol. American houses are optimized for size at the expense of permanence, and trailers are no different. They are cheap for a reason. Although they can be good for some people (no judgement here), it's just not on par with either a new house or an old one.

Valakas_ 2y ago

>On that note, houses are unquestionably more valuable today. No. They are better, not necessarily more valuable. Simple example: Today you can get a phone with a chip more powerful than the best supercomputers 50 years ago. Is today's chip more valuable (ie. price-value) than that supercomputer? No. An equivalent supercomputer back then would cost WAY more. You're bringing other variables into play and confusing things. Technology has improved, manufacturing costs have gone WAY down for higher quality products. The fact that we can get higher quality things nowadays has little to do with purchasing power and everything to do with science and technology. The fact we can afford a better quality house nowadays, is also much more related to material improvements, manufacturing, logistics, overall system efficiency (transportation, company competition,...) improvements than purchasing power. What we can compare is what other poster's are doing: time vs functions. For example, working time needed to have an average place to live in by the time's standards. And if you do that, you'll see today it requires A LOT more working time.

mistermann 2y ago

> With inflation, we want to know about the change in value of the dollar only. By "we", you are referring to you and others who want to know only this. Some people (not many) want to know what is going on comprehensively, and in fact. For example: I would like to know if there is any strategic changing of formulas to improve appearances going on, like there has been at pretty much every single job I have ever worked on. But to be fair, this is a subjective personal preference, and an unusual one at that. Most people prefer simplistic, memetic representations of reality (though, few can agree on which memes).

randomdata 2y ago
> By "we", you are referring to you and others who want to know only this. Right. I am referring to all those who want to know only this, along with everyone else. Because those who want to know something else would use another measure. Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance. Well... duh. > Some people (not many) want to know what is going on comprehensively Absolutely. Which is why we have many different ways to look at inflation. In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work? But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number. CPI is the one we picked to standardize on (but, of course, you can choose another if you want). It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough.
- mistermann 2y ago
  > Right. I am referring to all those who want to know only this, along with everyone else. "along with everyone else" is incorrect, because you have no way of knowing what other people want (and worse, maybe no way to know that). And the only way you "know" what "all those who want to know only this" is because it is a tautology, it is necessarily true. Though, you have no way of knowing what percentage of the population thinks like you do, so it is not particularly informative knowledge. > Because those who want to know something else would use another measure. Some people (me) would like to see all methodologies maintained indefinitely on a chart, so we can see how different versions of The Truth vary over time. I am interested to see if changes in methodology tend to correlate with changes in the "vibe" of the cost of making ends meet people are experiencing. I prefer this approach because it is more transparent, and because I do not trust my government, or the perceptions of my fellow Westerners (because of the way they think: how it "is", is how it seems to be....which tends to correlate quite nicely with how it is said (repeatedly) to be). > Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance. It is also "like" someone whining about how appliances don't last as long as they used to, but "is likes" are often more misinformative than informative (perhaps why they are so popular?). > Well... duh. Are you blaming others for the way you think? > Absolutely. Which is why we have many different ways to look at inflation. And also why I do not want historic "truth discovery" methodologies memory holed. > In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work? Don't know, but I do not trust them. Also, "in fact" terminating with "?" is a rather interesting approach. > But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number. Maybe we should get better formulas, because reality does not fit so nicely into simple, reductive, misleading models. > CPI is the one we picked to standardize on No, "we" did not pick it, someone else picked it "on our behalf"...according to "democracy" we are trained to believe, though it is not both flawlessly true and not misinformative. > (but, of course, you can choose another if you want). I can't get it published as "fact". > It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough. Good enough to satisfy people that want to be satisfied, but not good enough to satisfy all.

tonymet 2y ago

Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand". We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable. My point is that CPI isn't it, it underestimates true inflation by 3-5x or more , and it interferes with good governance. If the govt wants money from the people, they need to tax them and be held accountable for the policy

randomdata 2y ago
> Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand". Regular people understand inflation just fine. How useful it is to them is debatable, but it doesn't have to be for everyone. It's okay if some measurements are only useful to scientists and economists. The measure of the speed of light doesn't mean much in my day to day life either, but we don't have to abolish it because of that. > We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable. I think what most people are looking for is simply cost of living measure. They want to know by how much the costs to live (housing, food, etc.) have increased over inflation. Which we have. But that one might actually be a case of being "too dumb to understand", explaining why it is not commonly put to use. Inflation is, indeed, a much simpler concept. Or it may be that the ultimate cost of living measurement comes from one's own personal accounting records[1], negating the need to reach for any 'universal' perspective. [1] But I suspect most people don't keep any accounting records, so most likely the first one.
- JumpCrisscross 2y ago
  > what most people are looking for is simply cost of living measure You may have cracked the conundrum right there. People use inflation as a gauge of COL. That is incorrect, but understandable given the lack of a well-publicised national COL metric.
  - randomdata 2y ago
    > People use inflation as a gauge of COL. Which is interesting as you'd think actually living, and incurring the costs that go along with it, would be a much more useful gauge. Probably goes along with my suspicion that most people, especially those not already accounting for business activities, don't keep any meaningful record of their transactions. Hard to calculate COL without data. But at the same time, there isn't much effort in publishing national COL metrics as it is presumed that people will already know their own situation, which is always going to be way more telling. Individual COL can vary widely, even between neighbours, let alone on a national scale.

vineyardmike 2y ago

> houses are unquestionably more valuable today… They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t let survivorship bias fool you - the 1950s homes that working class families had were not that nice. The homes today cost more because more goes into them. We could all live in stuck huts we made ourself like in 1750 and everyone could afford two houses in 2024. Instead, housing has gone up because the utility of that housing has gone up. Oh and of course we’re not making nearly as many per-capita as we used to. So the scarcity is going up.

cpursley 2y ago
The increase in housing prices are not at all proportional to these advancements in building techniques and materials.
- ta1243 2y ago
  Because of the availability of land. There are three costs for housing 1) Materiels 2) Labour 3) Land
- vineyardmike 2y ago
  It absolutely raises the “floor” of the housing costs - more materials simply means more costs. And the labor to do extra work means more costs - and quality labor is much more expensive today. Same reason a bigger house means more costs. I would posit - admittedly without data - that outside of major metros where land is the clear dominant cost, most costs for housing increase is labor. There are houses and empty lots available within 15min of downtown Cleveland that are selling for <50k. If you go up to $100k, there are dozens of houses. They’re all empty lots or houses that need renovations. If you want a new construction in the same neighborhood, it’s $300k. The cost difference is labor or materials. Obviously Cleveland is a cherry-picked example but I used to live there so I picked my old neighborhood. San Francisco, Boston, Seattle, etc are obviously mostly driven by land costs due to demand and very high incomes.

mrcode007 2y ago

Most of what you have said starting with the definition is incorrect. I suggest you read BLS handbook on methodology.

wakawaka28 2y ago

>On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable. Keep in mind, demand was higher with the baby boom than it is today. Houses also used to be built to much higher specifications. Old houses were made with tons of premium timber that is still valuable even 50+ years later.

kasey_junk 2y ago
That is mostly survivor bias and cost of materials difference. We’ve used up most of the stores of large timber causing the price of it to go way up. At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury. As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality.
- wakawaka28 2y ago
  >At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury. Have you ever seen an old 2x4? This isn't "large beam" but it's obviously higher-quality than new 2x4s. >As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality. There used to be some homes built to low specifications. But most were built super solid. Ductwork, insulation, and just about anything else can easily be upgraded. Compared to classic European houses, ours are temporary trash. >A modern double wide trailer is higher quality. You just discredited yourself there to everyone who knows even a little bit about houses. Go find a 50 year old trailer and see how that looks lol. American houses are optimized for size at the expense of permanence, and trailers are no different. They are cheap for a reason. Although they can be good for some people (no judgement here), it's just not on par with either a new house or an old one.