CPI is ok for specific categories but the basket weighting is absolutely trash. That being said somehow healthcare indexing got messed up and it was down significantly which is silly because healthcare never goes down

This is the current basket weighting: https://www.bls.gov/cpi/tables/relative-importance/2022.htm

Which should be changed, under the constraint that they must sum to 100?

Medical care should be weighted at 20-30% to reflect how much of a burden it’s become. Childcare is severely underweighted as well. Housing is underweighted in rents and overweighted in owner equivalent rent. Those are just the obvious ones

> Childcare is severely underweighted as well.

Childcare is the average amount spent by all households, not only by the households which have childcare expenses. I spent essentially $0 on childcare now that my kids are old enough to stay home alone if my spouse and I go out. I expect to continue to spend $0 for the next 3-4 decades.

> Housing is underweighted in rents and overweighted in owner equivalent rent.

About 2/3 of Americans "own" their home. The owner-equivalent rent also happens to be about 2/3 the sum of (owner equivalent rent plus rent). That is not an accident, but rather is causally linked.

I would agree on that but compare weighting on college. Presumably not all kids make it to college but annual childcare costs in any licensed facility costs as much as college tuition so it still seems low.

Also though you may not notice it but your taxes are probably going up every year to cover additional public child care costs even if you aren’t paying directly.

Medical is probably one of the biggest mismatch categories though

There should be an attempt to calculate inflation separately from changes in productivity. Tech, for instance, has largely been deflationary due to technological improvements. Real estate, on the other hand, has been inflationary due to monetary policy. CPI doesn’t capture that at all. They should also add real estate and other assets to the inflation calculation. Stock valuations have been historically high. Put another way, $100 today buys you less future cash flow than in past years.

> There should be an attempt to calculate inflation separately from changes in productivity.

Two qurstions:

1. What does that even mean?

2. For what use?

> They should also add real estate and other assets to the inflation calculation.

There is plenty of tracking of asset prices. Why should it be part of generic (i.e., consumer) inflation, other than to break all the processes that depend on that measuring consumer prices as distinct from producer prices, asset prices, etc.?

> CPI is ok for specific categories but the basket weighting is absolutely trash.

They are based on spending surveys:

* https://en.wikipedia.org/wiki/Consumer_Expenditure_Survey

So the average CPI is what an average consumer spends spread nationally. You may personally have different weightings, and so what you 'feel' inflation is like may be different than the average.

Who as spends that little on healthcare? Even if it’s not paid by you it’s part of the total comp

> Who as spends that little on healthcare?

No one. CPI is a national average for the average person on an average basket of goods. It is not meant to reflect what one individual does.

In Canada, StatCan has a tool where you can enter your own personal weightings for various categories so you can get your personal CPI:

* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...

I wish people would stop conflating the model with reality: the map is not the territory.