4 ms·

"at this point, all we can say with any confidence is that it does not appear that women have a higher perception of inflation than men because of the things th

by redwood 14y ago

"at this point, all we can say with any confidence is that it does not appear that women have a higher perception of inflation than men because of the things they buy, the frequency of their shopping, or their knowledge of officially reported" Really? This is ridiculous. Men and women do buy very markedly different things in general, especially in family life. For example, men disproportionally buy technological items which contribute significantly to the stable CPI. CPI isn't just bread and butter... if it were inflation rates would be higher. Since the government can point to easier access to quality-of-life-enriching items like computers, which fall in price for equivalent goods year over year, it can manipulate the stats and make inflation look very low. This is appropriate for an "ideal" household that buys exactly that the CPI index holds. But on the other and someone who buys disproportionally the items that are rising faster than the CPI really does feel a higher inflation rate. It certainly seems conceivable that women tend to buy items that are rising in price faster than the CPI more than men. It's also possible that marketing gimmicks disproportionally target women, with clothing coming to mind for example: perhaps sticker prices rise much faster than inflation, but post-"SALE" prices don't. This is a gimmick designed to encourage buying of deep sale prices, that may play better in clothing than in other industries, and that thus women fall victim to more. But since the sticker prices rise, they're noticeable.

yummyfajitas 14y ago
Because CPI measures a rate, explanations like this only work in the short run. As computers/etc become cheaper, they become a smaller and smaller fraction of CPI. In the long run, CPI will be completely dominated by whatever factor grows the fastest. The article provides some evidence that this is not a short run phenomenon, nor a phenomenon limited to the US. A similar gap is present among Swedes in 1977, and persisted in the US from 1987-2000.
- Roboprog 14y ago
  As redwood alluded to, the content of the CPI is somewhat "gamed", though. It excludes "volatile" items such as food, housing and fuel. You know, the non-optional, inelastic purchases that people have to make.
  - effn 14y ago
    No, CPI includes food, housing and fuel. There is a "core" measure that excludes those, since they add little information but a lot of noise when you want to track the underlying trend.
    - yummyfajitas 14y ago
      Core CPI includes housing, but not food or fuel (since they are volatile). The difference between core CPI and exponentially smoothed CPI (which removes volatility but includes long term changes in food and fuel) is negligable: http://www.newyorkfed.org/research/staff_reports/sr236.pdf http://www.newyorkfed.org/research/staff_reports/sr236.pdf There may be gaming in CPI, but excluding volatile components is not it. Another way to see it: CPI and Core CPI track each other pretty closely, and until recently Core CPI was actually higher than CPI: http://research.stlouisfed.org/fredgraph.png?g=cMs http://research.stlouisfed.org/fredgraph.png?g=cMs
- msandford 14y ago
  It's because the CPI is actually gamed. You just have to change the basket of goods measured fast enough to keep the rate down. Like the substitution of hamburger for steak that Greenspan did. The website detailing how this "isn't shady" is laughable. http://www.bls.gov/cpi/cpiqa.htm http://www.bls.gov/cpi/cpiqa.htm Check out http://www.shadowstats.com/ http://www.shadowstats.com/: "One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless. "
  - yummyfajitas 14y ago
    Steak -> burger -> dog food. Then what? Most of the "tricks" proposed by conspiracy theorists for tweaking CPI only work once or twice.
    - msandford 14y ago
      Right, obviously you can only go so far on the steak to hamburger. But there are lots of places for abuse. The problem is that the definition for the CPI keeps changing, and thus, it's meaning over time is less useful. What this study showed is that perceived inflation is real and doesn't jive with the numbers that the economists produce. Who is right? A 500 person sample will be good to predict the sentiment of the US as a whole. Gallup says that they only need 1,000 people to get +-4% so this is reasonable. Ask yourself, which is more likely? The entirety of the US population doesn't understand how prices affect them day-to-day. Or that some economists have devised a moderately useful but not flawless metric? Price formation comes from the relative values that every human being places on the marginal unit of a good. Prices are an emergent property of people interacting chaotically in a marketplace. To suggest that literally EVERYONE's ability to sense the change in price over time you also need to throw out the very people that set the prices to begin with. EDIT: Link to gallup http://www.gallup.com/poll/101872/how-does-gallup-polling-work.aspx http://www.gallup.com/poll/101872/how-does-gallup-polling-wo...
deleted 14y ago
[deleted]

by redwood 14y ago

yummyfajitas 14y ago

Because CPI measures a rate, explanations like this only work in the short run. As computers/etc become cheaper, they become a smaller and smaller fraction of CPI. In the long run, CPI will be completely dominated by whatever factor grows the fastest. The article provides some evidence that this is not a short run phenomenon, nor a phenomenon limited to the US. A similar gap is present among Swedes in 1977, and persisted in the US from 1987-2000.

Roboprog 14y ago
As redwood alluded to, the content of the CPI is somewhat "gamed", though. It excludes "volatile" items such as food, housing and fuel. You know, the non-optional, inelastic purchases that people have to make.
- effn 14y ago
  No, CPI includes food, housing and fuel. There is a "core" measure that excludes those, since they add little information but a lot of noise when you want to track the underlying trend.
  - yummyfajitas 14y ago
    Core CPI includes housing, but not food or fuel (since they are volatile). The difference between core CPI and exponentially smoothed CPI (which removes volatility but includes long term changes in food and fuel) is negligable: http://www.newyorkfed.org/research/staff_reports/sr236.pdf http://www.newyorkfed.org/research/staff_reports/sr236.pdf There may be gaming in CPI, but excluding volatile components is not it. Another way to see it: CPI and Core CPI track each other pretty closely, and until recently Core CPI was actually higher than CPI: http://research.stlouisfed.org/fredgraph.png?g=cMs http://research.stlouisfed.org/fredgraph.png?g=cMs
msandford 14y ago
It's because the CPI is actually gamed. You just have to change the basket of goods measured fast enough to keep the rate down. Like the substitution of hamburger for steak that Greenspan did. The website detailing how this "isn't shady" is laughable. http://www.bls.gov/cpi/cpiqa.htm http://www.bls.gov/cpi/cpiqa.htm Check out http://www.shadowstats.com/ http://www.shadowstats.com/: "One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless. "
- yummyfajitas 14y ago
  Steak -> burger -> dog food. Then what? Most of the "tricks" proposed by conspiracy theorists for tweaking CPI only work once or twice.
  - msandford 14y ago
    Right, obviously you can only go so far on the steak to hamburger. But there are lots of places for abuse. The problem is that the definition for the CPI keeps changing, and thus, it's meaning over time is less useful. What this study showed is that perceived inflation is real and doesn't jive with the numbers that the economists produce. Who is right? A 500 person sample will be good to predict the sentiment of the US as a whole. Gallup says that they only need 1,000 people to get +-4% so this is reasonable. Ask yourself, which is more likely? The entirety of the US population doesn't understand how prices affect them day-to-day. Or that some economists have devised a moderately useful but not flawless metric? Price formation comes from the relative values that every human being places on the marginal unit of a good. Prices are an emergent property of people interacting chaotically in a marketplace. To suggest that literally EVERYONE's ability to sense the change in price over time you also need to throw out the very people that set the prices to begin with. EDIT: Link to gallup http://www.gallup.com/poll/101872/how-does-gallup-polling-work.aspx http://www.gallup.com/poll/101872/how-does-gallup-polling-wo...

deleted 14y ago

[deleted]