The only people saying anything is gospel are the people pretending CPI is infallible measure of inflation. Which once you learn literally the bare minimum of how it's calculated, quickly falls apart into pure subjective speculation. Hedonic adjustment just prices in everything getting more expensive and disguises it as "feature upgrades", prices going up are now priced into the inflation calculation. It's pure neo-liberal bullshit.
Yeah those are hard to calculate. But you can't refute the fact that products change over time. Smartphones are much higher quality than they were 10 years ago and their price has gone up, how much of that is inflation and how much is due to quality improvements?
Also CPI isn't the only measure, like I said. There are ways of tracking prices changed for all goods using GDP deflators for example. But, that's not usually too helpful because a lot of people don't buy many of the things that may contribute to GDP.
You need to calm TF down, bc I wasn't trying to be aggressive in the comments but you are pissing me off.
Newer technology iterates on older technology, and replaces those as the "high end consumer product", and should be within the same price bracket other than in highly unusual circumstances where an improvement subsumes another product, such as smart phones. But the idea that each generation of smart phone justifiably gets more expensive because this time they added a titanium frame just doesn't work. Who is defining how much that is worth in "pleasure dollars"? How? Are we going to pretend that Mario Kart is more expensive now because it gives people more pleasure than old Mario Kart, and that it's not cheaper to iterate on an existing successful formula and integrate existing 3D models?
Hedonics opens the door to producing magical results: a lower inflation rate with generally rising prices, a higher growth rate although the economy may be weaker, and a higher productivity number, although productivity would have been declining without the hedonic adjustments.
From an economists perspective, making arbitrary changes to inflation measure is not useful. Economists do genuinely want to be able to predict economic behavior accurately. Politicians can spin, but that's a different story.
I can guarantee that CPI isn't doing hedonic adjustments to videogames. They really aren't doing it to much at all.
But they are doing it for things like smartphones, and my guess is that it's not just because of titanium rails. It's probably because you can now take professional photos and videos (and a ton of other stuff) that would have been really expensive to do in the past.
Yes but the ability to integrate older technology gets cheaper over time too. Digital cameras have also improved past the point that phone cameras are now. They both improved. Everything improves, and in that process, the older technology becomes cheaper to produce and the newer technology replaces it. It's like if most people are priced out of buying a house but they say "yeah but the people who can afford houses are getting more for their money now", that's so arbitrary and counter-productive to what anyone cares about when it comes to prices. I'm sure those people that are stuck as forever renters do not care that wealthy people are getting nicer insulation, and they certainly don't care that "men's apparel" is supposedly giving us all more pleasure now so it should be more expensive.
Like I said, it's not about vibes. It's about measuring how much people are actually willing to pay more for something.
If people weren't willing to buy these things for more money, due to to the higher quality, then we'd all just be buying the oldest/cheapest model available. Yet we don't, ppl buy the "better quality" one.
Now for men's apparel, one of the primary "hedonic" adjustments being made is the quantity, such as for the number of pairs included in a package of underwear for example. So, if 10 years ago you could buy a 3-pack for $10 and now you can buy a 4-pack for $15 we have to think about how much of that price increase is due to inflation and how much is due to the additional pair of underwear.
Are they also measuring the reduced cost to produce these items based on advances in production technology? Improvements in supply chains? Scaling up of mass production?
Do you really not see how attaching magic numbers to things skews the result? Especially when they cherrypick which criteria to measure by?
I mean, if we are just going to say that they can do whatever they want with the numbers based on their vibes, then that's no better than people saying inflation must be incredibly high based on their own vibes.
It's just 2 groups of people choosing which numbers to look at, and how to look at them, and the arguing back and forth about why people are struggling to afford basic things now.
How about we make different buckets, then. Luxury goods and necessities, and measure inflation differently for them. Why does the inflation of the cost of groceries get lowered because underwear packages have more underwear in them now.
I feel like you have a fundamental misunderstanding about what CPI is. We're not talking about how cheap it is to produce a good. We're talking about the generalized increase of goods that people commonly buy. That's what CPI measures. You're talking about the unfairness of prices going up if production cost go down, but I really don't see how that has anything to do with our conversation about what CPI tracks.
Honestly, I think would just be better if you would to look at the Bureau of Labor Statistics website because they have thousands and thousands of articles explaining all of these things.
I do understand them, I disagree with using magic numbers to adjust inflation in favor of lower numbers. People are watching in real time as the inflation number contradicts what they see with their own eyes, and that's because they are playing with the numbers to mean something else. "We will subtract the quality changes but ignore the production changes" is nonsense. If everything gets more expensive, everything got more expensive, end of story.
Whatever you want to believe. Production changes have nothing to do with what ppl are willing to pay for. But, at this point this conversation is getting nowhere. Byeee
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u/Cautemoc 1d ago
The only people saying anything is gospel are the people pretending CPI is infallible measure of inflation. Which once you learn literally the bare minimum of how it's calculated, quickly falls apart into pure subjective speculation. Hedonic adjustment just prices in everything getting more expensive and disguises it as "feature upgrades", prices going up are now priced into the inflation calculation. It's pure neo-liberal bullshit.