Re:Why Canada's productivity has been underestimated for dec...
by Someone on Saturday December 29, 2012 @03:52PM
(#4983414)
"Incidentally, there is a completely non-subjective way to calculate inflation: choose a fixed basket of goods."
That 'choose' part is subjective. http://www.bls.gov/cpi/ (stress added):
"The Consumer Price Indexes (CPI) program produces monthly data on changes in the prices paid by urban consumers for _a_ representative basket of goods and services"
Your 'or at the very least a 20" TV' acknowledges that, too. How do you objectively choose between the two?
Similarly, "like appendix removal or aspirin": who determines that "aspirin" is the actual good, and not "pain killing" or "prevention of strokes"?
I don't know if inflation calculations were the problem in Canada, I'm just pointing out that it's one possible way.
Incidentally, there is a completely non-subjective way to calculate inflation: choose a fixed basket of goods. I.e., look at what someone in 1970 actually purchased, and then look today at what those goods/services [1] cost today. The only problem with this is that to calculate inflation from 1980 to today, you need to pick a 1980's basket rather than a 1970's basket, i.e. CPI stops being a single quantity you can push forward and backward in time.
[1] Also, don't choose categories of goods like health care - choose actual goods like appendix removal or aspirin.