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Ignore the bit about food and multipliers. They're not really relevant. This Orshansky person used estimates and approximations to come up with a rough "this i

by tbrownaw 11mo ago

Ignore the bit about food and multipliers. They're not really relevant. This Orshansky person used estimates and approximations to come up with a rough "this is what it takes to not starve" number, in the absence of sufficient high-quality data to calculate something more precisely. If you trust inflation / cost of living numbers, they're a measure of how expensive life is overall. This is the correct way to do things. The methodology of the original SWAG is not relevant to how to update it over time. . If you take apart the original estimate into all the different things that made up household expenses, and adjust those separately for price changes and substitutions and such, and our or back together... you're just putting in a ton of extra effort to re-build the "adjust for inflation" calculation from scratch. With tons of room to make mistakes, as demonstrated in the article.

degamad 11mo ago
The problem with the "adjust for inflation" methodology, is that inflation is not equal for all components of the basket. The CPI measures the average inflation of the basket, but if some components have grown significantly differently from others. In particular, some components of the current household budget were not included in the the original cost estimates. So the "inflation adjusted cost of living" doesn't incorporate those aspects, which is why rebuilding the number from scratch gets a result so wildly different from the inflation adjusted number, instead of being a few percent off due to a different methodology.
medvezhenok 11mo ago
The strongest argument is probably that for someone subsisting on the minimal wage, the CPI is not a good representation of their consumption basket (whereas it might be for someone close to the median). Therefore the adjustment should probably be based on a different number reflecting the actual consumption of households near the poverty line (food would probably be higher than it is in the CPI currently, as one example)

degamad 11mo ago

The problem with the "adjust for inflation" methodology, is that inflation is not equal for all components of the basket. The CPI measures the average inflation of the basket, but if some components have grown significantly differently from others. In particular, some components of the current household budget were not included in the the original cost estimates. So the "inflation adjusted cost of living" doesn't incorporate those aspects, which is why rebuilding the number from scratch gets a result so wildly different from the inflation adjusted number, instead of being a few percent off due to a different methodology.

medvezhenok 11mo ago

The strongest argument is probably that for someone subsisting on the minimal wage, the CPI is not a good representation of their consumption basket (whereas it might be for someone close to the median). Therefore the adjustment should probably be based on a different number reflecting the actual consumption of households near the poverty line (food would probably be higher than it is in the CPI currently, as one example)