(09-13-2012, 03:47 AM)kandrathe Wrote: Why Inflation Seems To Have Sharper Teeth Than the CPI Suggests - WSJ While the gist of that article is that perception is not reality, I think the opposite for the exact same reasons. When an average desktop computer increases in price by 20% and they count it as a decrease because this one is 30% faster. The fact is, if my computer dies and I need a new computer, I need a computer. I could buy the obsolete model, but I would be screwing myself out of a year or two of future utility. Same with autos -- when you buy the same average model for the same utilitarian reasons and it costs more -- that is inflation. Sometimes, like with wrist watches, a commodity is a commodity and doesn't really change so much year over year. Then, you can measure apples to apples.
This deserves its own explanation, although the BLS has a plenty good one themselves for anyone that cares to read it.
You say that, if a computer costs 20% more, but is 30% faster, that should be counted as an increase, not a decrease, because when "[you] need a new computer, [you] need a new computer." Because we need to compare "apples to apples."
So, let's do just that! Imagine apples* were like computers - every few years, they doubled in nutrition and tastiness.
When you went to the store, you still bought one apple, but you can't help but be blown away by how much nicer they are now than in the 1990s. Your "applications" - things like apple pie, or applesauce - are far more delicious today than before. Things that nobody would ever do with 1990 apples are now commonplace with 2012 apples, because of how much tastier and more nutritious they are. Apples are not only being served as main courses at top restaurants, but they're also being used as food aid, because it's just so efficient, now that so much nutrition can be packed into one little apple. The total caloric value of apples consumed in the world has increased a thousandfold, and the price per calorie has dropped by the same. Nobody but crazy reactionaries and culinary history hobbyists use 1990 apples anymore. If you found 1990 apples sold in a retail store, you'd laugh your head off - who on earth would buy them? You can literally rummage through the trash for old appleseeds - people will pay you to take them off your hands. Everyone agrees: 2012 apples are awesome, 1990 apples are not.
Now, tell me, should those apples be measured, "apples to apples," as the same item? No adjustment for quality increase? That is *precisely* what you are asking us to do. And it's crazy. And the longer we calculate in this bizarre way, the crazier it gets.
-Jester
*apples the fruit, not Apple Computers - although feel free to think of the two side by side if it helps.