Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Hedonic Adjustments
Old 01-21-2005, 08:57 PM   #1
Thinks s/he gets paid by the post
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Hedonic Adjustments

A few months ago, Bill Gross wrote a column where he repeatedly referred to the CPI hedonic adjustments as a con job. The column got a lof of attention and was discussed in our forum too.

Curious about how much impact this might have on my retirement, I spent several hours looking into CPI and hedonic adjustments. I am now more confused than ever.

Here are a number of links that seem to contradict each other as well as some links that show information about how a few items were evaluated to arrive at their hedonic adjusted CPI.

Another attack on hedonic adjustments:

Hedonic adjustments are insignificant - Impact is zero:

Hedonic adjustments have minor impact:
The CPI Adjustment

In fact, by weight, or importance in the index, just 33 percent of the CPI is subject to hedonic adjustment, not 46 percent, according to BLS officials. Three items, rents, owner's equivalent rent and a portion of the apparel category, account for almost 32 percent of that weighting.

Unfortunately for Gross's argument, hedonic adjustments for those items boost the index. That's because for the rent components, adjustments relate to the aging of the housing stock.

For the other items adjusted hedonically -- computers, televisions, audio equipment, video cameras, VCRs, DVD players, major appliances and college textbooks -- the rate of price increase is lowered. However, those items collectively account for a scant 1.1 percent of the index by weight. Computers and peripheral equipment, about which Gross writes a great deal, have a weight of only 0.23 percent.
If you are really masochistic, you can read the articles below to see how hedonic adjustments are made on specific items.

Article on apparel price index & hedonic adjustments:
This article presents some tables that show the hedonic and nonhedonic figures on men and women's apparel.

Article on Audio products price index & hedonic adjustments:
Includes a couple of tables that compare hedonic and nonhedonic figures on audio equipment.

Article on hedonic adjustments as applied to cordless phones:

Article on the expanding role of hedonic adjustments:
sgeeeee is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Adjustments to Equity/FI Ratio with Age Hydroman FIRECalc support 1 01-07-2007 06:55 PM
Domestic Adjustments after ER BOBOT Life after FIRE 59 09-27-2006 02:13 PM
Lies, Damn Lies, and Statistics Sue FIRE and Money 20 03-01-2006 02:51 PM
More about CPI and hedonic adjustments sgeeeee Other topics 2 06-06-2005 06:56 PM


All times are GMT -6. The time now is 01:27 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.