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03-14-2012, 02:50 PM
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#21
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
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Quote:
Originally Posted by MichaelB
I remember the charts and some intense discussions. Bill Gross dedicated his monthly investment newsletter to inflation measurement a number of times. Along with others, he was very critical of hedonic adjustments and the implied rent formula.
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I think the hedonic adjustments get a bad wrap because they sound like something someone who's trying to fudge the number would do. But the adjustments take into account both increases and decreases in quality - for every T.V. that goes HD, there is an oak table that is now partical board. Besides, the impact on all of these adjustments isn't what the critics contend.
According the BLS
Quote:
BLS has used hedonic models in the CPI shelter and apparel components for roughly two decades, and on average hedonic adjustments usually increase the rate of change of those indexes. Since 1998, hedonic models have been introduced in several other components, mostly consumer durables such as personal computers and televisions, but these newer areas have a combined weight of only about one percent in the CPI. A recent article by BLS economists estimated that the hedonic models currently used in the CPI outside of the shelter and apparel areas have increased the annual rate of change of the All Items CPI, but by only about 0.005 percent per year.
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So the impact of hedonic adjustment actually has increased reported CPI inflation, but only 0.005 percent per year.
Much ado over nothing, really.
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Retired early, traveling perpetually.
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03-14-2012, 02:56 PM
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#22
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
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Mods: when this thread plays out, be sure to add it to the FAQs - along with the other 39 threads on this subject.
http://www.early-retirement.org/foru...not-30742.html
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Numbers is hard
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03-14-2012, 03:11 PM
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#23
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,518
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Quote:
Originally Posted by FUEGO
I would guess there is a decile at the bottom who receive government handouts that are so extensive as to mostly shield them from inflation. I'm thinking the folks getting WIC, food stamps, TANF (or whatever they call it now), medicaid (or unpaid emergency room visits), public housing/sec 8, utility supplements, using heavily subsidized public transit, etc.
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I suspect folks down here are truly squeezed and gov't assistance isn't nearly as generous as many believe, but we're both guessing.
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03-14-2012, 03:14 PM
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#24
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,518
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Quote:
Originally Posted by Gone4Good
I think the hedonic adjustments get a bad wrap because they sound like something someone who's trying to fudge the number would do. But the adjustments take into account both increases and decreases in quality - for every T.V. that goes HD, there is an oak table that is now partical board. Besides, the impact on all of these adjustments isn't what the critics contend.
According the BLS
So the impact of hedonic adjustment actually has increased reported CPI inflation, but only 0.005 percent per year.
Much ado over nothing, really.
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Unless you have to pay for hedonic adjustments with a declining real wage or non-Cola'd pension. Then it is nothing but much ado, really.
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03-14-2012, 03:16 PM
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#25
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,021
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Quote:
Originally Posted by REWahoo
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Good idea. I added it, in case we forget.
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03-14-2012, 03:20 PM
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#26
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Administrator
Join Date: Jan 2008
Location: Chicagoland
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03-14-2012, 03:24 PM
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#27
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,021
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Don't know about that, but that post containing the CPI threads is inflating very quickly.
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Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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03-14-2012, 03:27 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
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Quote:
Originally Posted by Alan
Don't know about that, but that post containing the CPI threads is inflating very quickly.
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Had we hedonically adjusted it for quality it would disappear altogether.
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Retired early, traveling perpetually.
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03-14-2012, 03:30 PM
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#29
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,021
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Quote:
Originally Posted by Gone4Good
Had we hedonically adjusted it for quality it would disappear altogether.
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Never mind the quality, feel the width...
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Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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