Comments on: Style and the CPI http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/ The Sweet Release of Reason Tue, 22 May 2012 20:28:45 +0000 hourly 1 By: Jeff Lonsdale http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4995 Jeff Lonsdale Fri, 01 Apr 2005 23:21:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4995 Granted, Bill Gross can be ridiculous. I think he's half right a lot of the time, which has been good enough for him. I don't think all hedonic adjustments are insidious and substitution effects shouldn't be taken into account, but at the very least the method the BLS uses for measuring the cost of computers leads to an understatement of inflation. If people are consuming higher quality goods at higher prices, the cost of living has gone up, even if their quality of life has gone up as well. I'm not sure one index can accurately reflect both whether consumers are still getting their money's worth and the cost of living at the same time. Even if the wish was an accurate portrayal of the cost of living, one index wouldn't work as things such as medical, housing, and college expenses factor differently into different stages of people's lives. Value-laden and contestable... yet we still need to try and make heads or tails of what the government statistics are actually saying. Granted, Bill Gross can be ridiculous. I think he’s half right a lot of the time, which has been good enough for him. I don’t think all hedonic adjustments are insidious and substitution effects shouldn’t be taken into account, but at the very least the method the BLS uses for measuring the cost of computers leads to an understatement of inflation.
If people are consuming higher quality goods at higher prices, the cost of living has gone up, even if their quality of life has gone up as well. I’m not sure one index can accurately reflect both whether consumers are still getting their money’s worth and the cost of living at the same time. Even if the wish was an accurate portrayal of the cost of living, one index wouldn’t work as things such as medical, housing, and college expenses factor differently into different stages of people’s lives.

Value-laden and contestable… yet we still need to try and make heads or tails of what the government statistics are actually saying.

]]> By: Will Wilkinson http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4994 Will Wilkinson Thu, 31 Mar 2005 14:58:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4994 Jeff, the CPI is basically how we measure the cost of living. If it is overestimating inflation, then it cannot at the same time be underestimating the cost of living. Gross seems not to know what he is talking about. He seems to take the pre-Boskin CPI as some kind holy writ defining the elusive really real rate of inflation and thus any deviation is a kind of flim flammery. His exclamation against substitution, for instance, reveals some shoddy habits of economic reasoning. Jeff, the CPI is basically how we measure the cost of living. If it is overestimating inflation, then it cannot at the same time be underestimating the cost of living.

Gross seems not to know what he is talking about. He seems to take the pre-Boskin CPI as some kind holy writ defining the elusive really real rate of inflation and thus any deviation is a kind of flim flammery. His exclamation against substitution, for instance, reveals some shoddy habits of economic reasoning.

]]> By: Jeff Lonsdale http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4993 Jeff Lonsdale Thu, 31 Mar 2005 04:24:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4993 Bill Gross has another point of view on these hedonic adjustments, and how most of the recent ones are politically motivated. <a href="http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm" rel="nofollow">http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm</a> Even if it were granted that the CPI is overestimating inflation because there aren't enough of these hedonic adjustments, they are still underestimating the increased costs of living. Bill Gross has another point of view on these hedonic adjustments, and how most of the recent ones are politically motivated.

http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm

Even if it were granted that the CPI is overestimating inflation because there aren’t enough of these hedonic adjustments, they are still underestimating the increased costs of living.

]]> By: Jeff Lonsdale http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4990 Jeff Lonsdale Wed, 30 Nov -0001 00:00:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4990 Bill Gross has another point of view on these hedonic adjustments, and how most of the recent ones are politically motivated. <a href="http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm" rel="nofollow">http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm</a> Even if it were granted that the CPI is overestimating inflation because there aren't enough of these hedonic adjustments, they are still underestimating the increased costs of living. Bill Gross has another point of view on these hedonic adjustments, and how most of the recent ones are politically motivated.

http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm

Even if it were granted that the CPI is overestimating inflation because there aren’t enough of these hedonic adjustments, they are still underestimating the increased costs of living.

]]> By: Will Wilkinson http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4991 Will Wilkinson Wed, 30 Nov -0001 00:00:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4991 Jeff, the CPI is basically how we measure the cost of living. If it is overestimating inflation, then it cannot at the same time be underestimating the cost of living. Gross seems not to know what he is talking about. He seems to take the pre-Boskin CPI as some kind holy writ defining the elusive really real rate of inflation and thus any deviation is a kind of flim flammery. His exclamation against substitution, for instance, reveals some shoddy habits of economic reasoning. Jeff, the CPI is basically how we measure the cost of living. If it is overestimating inflation, then it cannot at the same time be underestimating the cost of living.

Gross seems not to know what he is talking about. He seems to take the pre-Boskin CPI as some kind holy writ defining the elusive really real rate of inflation and thus any deviation is a kind of flim flammery. His exclamation against substitution, for instance, reveals some shoddy habits of economic reasoning.

]]> By: Jeff Lonsdale http://willwilkinson.net/flybottle/2005/03/28/style-and-the-cpi/#comment-4992 Jeff Lonsdale Wed, 30 Nov -0001 00:00:00 +0000 http://www.willwilkinson.net/flybottle/?p=679#comment-4992 Granted, Bill Gross can be ridiculous. I think he's half right a lot of the time, which has been good enough for him. I don't think all hedonic adjustments are insidious and substitution effects shouldn't be taken into account, but at the very least the method the BLS uses for measuring the cost of computers leads to an understatement of inflation. If people are consuming higher quality goods at higher prices, the cost of living has gone up, even if their quality of life has gone up as well. I'm not sure one index can accurately reflect both whether consumers are still getting their money's worth and the cost of living at the same time. Even if the wish was an accurate portrayal of the cost of living, one index wouldn't work as things such as medical, housing, and college expenses factor differently into different stages of people's lives. Value-laden and contestable... yet we still need to try and make heads or tails of what the government statistics are actually saying. Granted, Bill Gross can be ridiculous. I think he’s half right a lot of the time, which has been good enough for him. I don’t think all hedonic adjustments are insidious and substitution effects shouldn’t be taken into account, but at the very least the method the BLS uses for measuring the cost of computers leads to an understatement of inflation.
If people are consuming higher quality goods at higher prices, the cost of living has gone up, even if their quality of life has gone up as well. I’m not sure one index can accurately reflect both whether consumers are still getting their money’s worth and the cost of living at the same time. Even if the wish was an accurate portrayal of the cost of living, one index wouldn’t work as things such as medical, housing, and college expenses factor differently into different stages of people’s lives.

Value-laden and contestable… yet we still need to try and make heads or tails of what the government statistics are actually saying.

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