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Comment by nimos | Hacker News Reader

Thank god TVs keep getting bigger so we can keep inflation down with hedonic adjustments.[0]

[0][https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...]

edit: Not that I love the AEI I think this is one of the most important pictures of the 21st century: https://www.aei.org/wp-content/uploads/2019/01/cpichart2019....

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Great chart. The items with constant or decreasing prices are made overseas by people that cannot afford them. This is not a healthy balanced system.

Everything increasing in prices are mostly needs rather than wants too. Not that you don't need any of those thing decreasing in prices, but increasing is housing, healthcare, and education. Those are pretty fundamental needs.

They are getting the size of walls now, so I'm ready to live out Fahrenheit 451.

I would argue that most of the western world is already there.

With mass media begin projected from every flat surface, less and less people are actually 'reading' (and I don't consider doom scrolling Facebook to be 'reading'), so we are one large ash pile away from the core message of the book.

You're right, it should have it's own name. It's much closer to drug use. Constantly context switching with high emotionality. "Dopamine streaming"?

It takes a lot longer to put out an inflammatory book and it's harder to actually write one, because it has to be a whole book, not just 3 paragraphs. There was a lot less data easily accessible, meaning you had to have instincts of a seasoned craftsman or luck. The medium itself really did help us out for a long time.

Internet addiction has been a thing for a long time.

Is that graph saying cars stayed the exact same price in dollars even with 56% inflation? That doesn't make sense to me.

Yup. Welcome to the wild wild west of hedonic adjustment. Things like side impact airbags and rear view cameras basically give the BLS unlimited power to drive down inflation.

I don't believe new or used vehicle purchases qualify for hedonic adjustments.

https://www.bls.gov/cpi/quality-adjustment/home.htm

Cars fall under cost based adjustments. This is the most recent (AFAIK) document the BLS has published: https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf

It's not entirely an unfair point in the sense clearly a modern car with modern safety and electronics costs more to produce (hence the cost basis). But as far as I know the BLS is basically given free reign to invent the cost basis.

Bear in mind that the chart covers a 20-year period. A 56% rise in prices over 20 years is 2.25% per year.

Why doesn't it make sense to you that this particular basket of goods can rise in price, on average, 2.25% pear year while individual goods in the basket can either fall in price or rise much faster?

The reason I find that confusing is that cars keep getting new safety standards, emissions standards, fuel economy standards. Adding those new features isn't free. But somehow cars managed to decrease in price in inflation-adjusted dollars. Have there been significant technological advances that would allow car prices to decrease in inflation-adjusted dollars?

Additionally, from my own point of view, it doesn't feel to me car prices dropped in inflation-adjusted dollars. This could be a mistaken feeling though.

This graph seems to say cars increased in dollars pretty steadily from 2014 to 2021:

https://wolfstreet.com/2021/05/27/the-whole-mindset-has-chan...

Maybe that's just people switching from sedans to SUVs though. That could also be responsible for my feeling of the inflation-adjusted price not changing, if I was looking at sedans in the past but SUVs now.

They haven’t decreased in price. The feds instead say, essentially, “hybrid cars and airbags didn’t exist when this metric was invented, so to compare apples to apples we’ll guess at what a 1960’s car would cost if it were made today today” and then invents a number.

A better description of what they do is to make a list of the features that car Modern has and car Old doesn't. Say the airbag. Or anti-lock breaks. Then they look at how much it costs car Modern to add the airbag, using manufacturer's cost of producing that feature. Or how much it costs to have anti-lock breaks. Then they subtract that from the price of car Modern to try to get an apple to apple baseline of how much it would take to produce car Modern without the feature.

Note that this process is not a hedonic adjustment, it's a production cost adjustment, which is what is used to deflate the price of cars.

It’s not how costs and prices work though.

Then nimos's second link is pretty useless to me. I want to know for example the price in dollars of a typical TV over time. I don't want to know the price in dollars/pixel of a typical TV over time.

A graph comparing dollars/pixel of TVs to the price of college doesn't make sense to me.

The increasing standards are a part inflation, at least as perceived by consumers.

Younger generations keep citing cheap housing of older generations. One of the differences is that in 1800, I could chop down some wood, and put up a home, with no electricity, plumbing, or much of anything else. Basic shelter was available to anyone willing to do the work of building a log cabin, and who can afford an axe.

In 2021, the baseline cost includes everything from inspections and licensing, to fancy manufactured insulation, to sophisticated plumbing, to meeting fire codes. It's worth reading about the legal troubles of people trying to live off-grid.

Same thing with cars. If I could, I'd buy a 2021-equivalent to a VW Bug, but I can't.

There's a mandatory minimum standard of living.

This has all sorts of cascading impacts, not the least of which are the power dynamics of wage slaves lacking a BATNA.

This basically supports my confusion.

nimos's second link says that cars stayed the exact same price in numerical dollars, meaning cars should the same price they did today as they did in the past. You seem to be saying cars have gone up in price. There's a contradiction.

It's not a contradiction.

A 1980 Dodge Aspen cost under $5000, and was a large sedan capable of carrying 6 passengers. From a consumer's point of view, a comparable car today -- something suitable for transporting a family with three kids -- is around $20,000, so about 3% annual inflation.

http://blog.consumerguide.com/wp-content/uploads/sites/2/201...

On the other hand, a 2021 Kia Soul or Chevy Trailblazer have features which wouldn't exist on a 1980 vehicle, or only be available on super-luxury models, so if they sold in 1980, they'd probably be $20k. Zero inflation. They have:

* Crumple zones

* Air bags

* AC

* Much better gas mileage

* Power windows

* Touch screens

* Various driver-assist systems

* Cell phone connectivity / bluetooth

* ... and so on

It depends on how you squint; data can paint either conclusion. On a related note, if you wanted a 2021 car with the same amount of steel as a Dodge Aspen, you'd be looking at a lot more than $20k; cars back then were built in ways which required a lot more material (an upside being maintainability; you could pop the hood and do a lot of work yourself).

Ok, so the graph isn't showing the price change of actual cars that people buy, buy hypothetical cars invented based in feature set.

It's kind of a weird comparison, because it makes it seem like people less in inflation-adjusted dollars, when in fact that's not true.

That's a universal problem in estimating inflation. People buy different things, and products come and go.

How do you compare a house build to 1900 standards to one build to 2020 standards? How do you compare fresh foods from the local farmer to factory-manufactured ones?

People shift preferences based on prices too. Manufactured goods started out as premium products, and now, fresh foods are increasingly a premium product.

It's an impossible problem. People either do their best, or lie with statistics, depending on the domain.

The cheapest new car in the US today is a Mitsubishi Mirage for about $14K. Back in 1985 the cheapest new car was a Yugo for $4K. In inflation adjusted terms that $4K in 1985 would be equivalent to about $10K today, leaving a remaining difference of about $4K for the new Mirage. So is a Mirage $4K better than a Yugo in terms of safety, comfort, and reliability? I would say yes but that's a matter of opinion.

Your comment illustrates exactly why I'm confused. You say cars went up in numerical dollars from $4k to $14k. But nimos's second link says that cars stayed the exact same price in numerical dollars, meaning cars should cost $4k today. There's a contradiction.

Housing costs is interesting (no pun intended) - does that include mortgage costs? with interest rates at near record lows I'd have expected housing costs to have come down.

Mortgage rates have quite a direct impact on house prices.

This was really interesting, thanks for the links!

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