Using inflation tracking methods from 80s and 90s, inflation would be ~10%

Re:Using inflation tracking methods from 80s and 90s, inflat... by dragonwriter on Tuesday April 20, 2021 @12:58PM (#26877300)

The author contends that the old fixed-basket-of-goods-with-fixed-weighting that doesn’t account for substitution is more appropriate that modern methods which account for substitution.

So if you started tracking inflation before automobiles were available, then your 2020 stats shouldn’t be based on costs of automobiles at all, but should reflect horses and carriages with weighting reflecting their use in your baseline year.

That this approach is both seriously flawed and increasingly so the more rapidly available products and consumer behavior evolves should be obvious.

The old method is simpler, has less room for difficult assessments like substitution and hedonic adjustments, but is fundamentally broken in dealing with the modern world.

Using an outdated fixed basket and weightings means you are ignoring what are currently essential goods but giving heavy weight to things that used to be essential goods but have become niche vanity consumables or luxury collectibles.

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Re:Using inflation tracking methods from 80s and 90s, inflat... by jjoonathan on Tuesday April 20, 2021 @01:08PM (#26877417)

Does the new methodology include a negative hedonic adjustment for substitution of inferior goods? Anecdotally that sort of thing seems to have been on the rise for a decade and by my reckoning this scenario should definitely count as inflation:

    Wage stays constant
    Price of health care goes up
    Make do with worse health insurance
    Price of housing goes up
    Move in with parents / more roommates

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