Why Have Policymakers Abandoned the Working Class?

[coloradoatheist]

And even if you asked "What's the price of 19" TVs?" it's still hard to answer. The new version has a better picture which has to be worth something, the new version uses less power--you have to adjust the costs for the power they use to compare them fairly (and how many hours will it be on??), the new version takes less space--and housing space is expensive.

Once again, the CPI measures the price of the TVs that people are buying. It doesn't delve into the subjective questions of utility. It doesn't maintain obsolete 19" CRT TVs because people aren't buying them. But they still buy TVs. People decide the utility of TVs and it is reflected in the number and prices of the TVs that they buy. And that is reflected in the CPI, as it should be.

If people need more room because of a change in TV viewing it will be reflected in the cost of housing that they live in, say that they want a media room. (The CPI don't include home price, it accounts for housing costs by including rent in the index. Rent does track home values but it is dampened over time, it is not as volatile over time.)

And the issue is that a 30 inch TV is better than a 15 inch TV. So if a 30 inch TV and a 15 inch TV are the same price, it underestimated deflation.

 

[SimpleDon]

Once again, the CPI measures the price of the TVs that people are buying. It doesn't delve into the subjective questions of utility. It doesn't maintain obsolete 19" CRT TVs because people aren't buying them. But they still buy TVs. People decide the utility of TVs and it is reflected in the number and prices of the TVs that they buy. And that is reflected in the CPI, as it should be.

If people need more room because of a change in TV viewing it will be reflected in the cost of housing that they live in, say that they want a media room. (The CPI don't include home price, it accounts for housing costs by including rent in the index. Rent does track home values but it is dampened over time, it is not as volatile over time.)

1) The CPI does attempt to correct for such things.

2) The modern TV is much smaller than the old one, it's going to save space. This house was built in the era of CRTs--and has a niche in the family room meant for TVs. That's a few hundred dollars of floor space that is of little use the era of flat screens.

3) A change in the area the family needs is not going to automatically reflect in the CPI because it compares like with like.

You live in a very, strange, very scary world of conspiracies. How am I suppose to answer with all of your preconditions? You believe that the CPI is trying to accomplish more than to just determine the increases in prices from year to year. That it is in some strange way a threat to your world view. I can't even begin to guess why.

So tell us, what do you believe that the CPI is trying to accomplish? And why does it threaten you so?

 

[SimpleDon]

Once again, the CPI measures the price of the TVs that people are buying. It doesn't delve into the subjective questions of utility. It doesn't maintain obsolete 19" CRT TVs because people aren't buying them. But they still buy TVs. People decide the utility of TVs and it is reflected in the number and prices of the TVs that they buy. And that is reflected in the CPI, as it should be.

If people need more room because of a change in TV viewing it will be reflected in the cost of housing that they live in, say that they want a media room. (The CPI don't include home price, it accounts for housing costs by including rent in the index. Rent does track home values but it is dampened over time, it is not as volatile over time.)

And the issue is that a 30 inch TV is better than a 15 inch TV. So if a 30 inch TV and a 15 inch TV are the same price, it underestimated deflation.

Once again, you are mistaking utility for price. They are only trying to determine the change in prices from year to year of the TVs that people are buying. 'Better' is a subjective judgement of utility that varies from person to person. Price is an objective fact determined by reading the sticker. One is hard to determine. One isn't. I will leave you to figure out which is which. You can ask Loren for help but no one else.

 

[Axulus]

And the issue is that a 30 inch TV is better than a 15 inch TV. So if a 30 inch TV and a 15 inch TV are the same price, it underestimated deflation.

Once again, you are mistaking utility for price. They are only trying to determine the change in prices from year to year of the TVs that people are buying. 'Better' is a subjective judgement of utility that varies from person to person. Price is an objective fact determined by reading the sticker. One is hard to determine. One isn't. I will leave you to figure out which is which. You can ask Loren for help but no one else.

False, they take into account the quality in their determination as well. How do you determine the change in the price of a TV that was being sold last year but is no longer being sold this year because it is obsolete? The BLS attempts to take into account these changes though a "hedonic quality adjustment":

http://www.bls.gov/cpi/cpihqaqanda.htm

 

[SimpleDon]

Once again, you are mistaking utility for price. They are only trying to determine the change in prices from year to year of the TVs that people are buying. 'Better' is a subjective judgement of utility that varies from person to person. Price is an objective fact determined by reading the sticker. One is hard to determine. One isn't. I will leave you to figure out which is which. You can ask Loren for help but no one else.

False, they take into account the quality in their determination as well. How do you determine the change in the price of a TV that was being sold last year but is no longer being sold this year because it is obsolete? The BLS attempts to take into account these changes though a "hedonic quality adjustment":

http://www.bls.gov/cpi/cpihqaqanda.htm

Well strike me dead on this one. I suppose that you are right, that this means that any attempt to quantify price changes is totally doomed to failure. [/sarcasm]

 

[Axulus]

False, they take into account the quality in their determination as well. How do you determine the change in the price of a TV that was being sold last year but is no longer being sold this year because it is obsolete? The BLS attempts to take into account these changes though a "hedonic quality adjustment":

http://www.bls.gov/cpi/cpihqaqanda.htm

Well strike me dead on this one. I suppose that you are right, that this means that any attempt to quantify price changes is totally doomed to failure. [/sarcasm]

I never said it was doomed to failure. However, they are in fact attempting to quantify the change in quality in terms of prices.

 

[SimpleDon]

Well strike me dead on this one. I suppose that you are right, that this means that any attempt to quantify price changes is totally doomed to failure. [/sarcasm]

I never said it was doomed to failure. However, they are in fact attempting to quantify the change in quality in terms of prices.

Yes, in terms of prices, not utility. When we started this I told you that when they substitute one item for another they have to factor the change to prevent a discontinuity in the results. This is how they do it. They are not accommodating a change in utility, they are maintaining a statistical continuity.

Are you arguing just to be arguing? Or do you have a point? Do you believe that there is a better way to do this? A better CPI?

Not that I am adverse to arguing for the shake of arguing. It is pretty much my rational for being here.

 

[Axulus]

I never said it was doomed to failure. However, they are in fact attempting to quantify the change in quality in terms of prices.

Yes, in terms of prices, not utility. When we started this I told you that when they substitute one item for another they have to factor the change to prevent a discontinuity in the results. This is how they do it. They are not accommodating a change in utility, they are maintaining a statistical continuity.

Are you arguing just to be arguing? Or do you have a point? Do you believe that there is a better way to do this? A better CPI?

Not that I am adverse to arguing for the shake of arguing. It is pretty much my rational for being here.

No point other than what I've stated. We may be in agreement here and I just misinterpreted what you were disputing with the other posters.

 

[ksen]

hahaha, all those financial guys are going to feel really dumb for relying on the cpi for some of their calculations once I forward this thread to them.

 

[angelo]

View attachment 1172

so when a house doubles in price it's not considered inflation?

Have the wages and salaries also doubled?

 

[thief of fire]

Serious questions:
Which American policy makers have stood up for the working class.
And, which tradition in American history that did wasn't marginalized?

 

[coloradoatheist]

Once again, you are mistaking utility for price. They are only trying to determine the change in prices from year to year of the TVs that people are buying. 'Better' is a subjective judgement of utility that varies from person to person. Price is an objective fact determined by reading the sticker. One is hard to determine. One isn't. I will leave you to figure out which is which. You can ask Loren for help but no one else.

False, they take into account the quality in their determination as well. How do you determine the change in the price of a TV that was being sold last year but is no longer being sold this year because it is obsolete? The BLS attempts to take into account these changes though a "hedonic quality adjustment":

http://www.bls.gov/cpi/cpihqaqanda.htm

But it's still a guess and an artwork for the thousands of items that they track each year. And when inflation is really 2.1% instead of 2.2% in year, the issue isn't as important. Its the long term trends that we try and make a big deal with that I have an issue with.

 

[angelo]

The answer to the O/P is that policy makers have abandoned the working class because that's not where the campaign funds are coming from.

 

[Axulus]

The answer to the O/P is that policy makers have abandoned the working class because that's not where the campaign funds are coming from.

Not to mention the champagne funds

 

[angelo]

Yea okay. I wasn't going to mention that!