The average new car in the US lasts like 2x longer than it did in 1998. Shouldn’t that factor in?
Absolutely not. Where do you stop with this game? Do you factor in that the seats are better so people go less to the doctor for back pain?
I mean, I really struggle to follow your logic.
If a paper towel roll has 2x the sheets but costs 1.5x more, is that inflation too?
The paper towel is a bad example because you clearly can quantify the number of sheets. It gets more tricky if you say new paper towels are more absorbent so you need less so there is no inflation although the sheet costs more. How do you measure that? These metrics are way too easy to be gamed. Next is apples costing twice as much but they are crunchier so no inflation?
You can’t just keep randomly changing the relevant populations. First it was working people who can’t afford a breakdown. Now it’s wealthy people who choose to buy cars regularly. Maybe that’s why it’s difficult to grasp inflation: it’s a basket of everybody
> How do you quantify how much longer cars last?
https://ihsmarkit.com/research-analysis/average-age-of-vehic...
> Maybe people use them longer because cars are better or maybe they use them longer because they can’t afford new cars.
You’re implying that people used to junk old cars because new ones were so cheap? Interesting take.
> The paper towel is a bad example because you clearly can quantify the number of sheets
I can also literally quantify how much longer cars last (see link above).
> It gets more tricky if you say new paper towels are more absorbent so you need less so there is no inflation although the sheet costs more.
Yeah, you know inflation takes a basket of spend into account, right? So yeah if in a year, the average consumer buys half as many paper towels that cost 2x as much that is exactly “no inflation”.
> These metrics are way too easy to be gamed. Next is apples costing twice as much but they are crunchier so no inflation?
I really suggest you read up more on the thinking behind inflation if you’re going to have such a strong opinion about it. Apples being crunchier is not accounted for in hedonic adjustments [0]. Like literally. Go to FK011
[0] https://www.bls.gov/cpi/quality-adjustment/home.htm
EDIT: Learn something new I guess. Cars aren’t even subject to hedonic adjustment. They have their own adjustment system that seems pretty fair if you read it[1]
[1] https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf
The USDOT tracks this! That’s why cars are such a bad example.
In 1998, the average age of a car on the road was 8.8 years. [0]
In 2022 it’s 13 years. [1]
Factor in install-base effects and the multiple probably rounds to 2x
[0] https://www.bts.gov/content/average-age-automobiles-and-truc...
[1] https://www.carscoops.com/wp-content/uploads/2022/05/SP-Glob...
I’m sorry but the idea that “we used to junk cars sooner because new cars were cheaper” is a very big stretch to support your bias (much moreso than the concept of hedonic adjustment)
This is not obvious to you? Look at how many things (especially plastics and electronics) are wasted today while they still function because they are so cheap. How many times have you replaced your smartphone while it still worked fine?
The point, again, is that we can do reasonable mental gymnastics to more or less counter-act any hedonic adjustments (which were also mental gymnastics to make inflation seem lower in the first place). A better metric would involve fewer loopholes like this that allow arbitrary mental gymnastics in the first place and instead say "how much does an entry level vehicle cost, amortized with upkeep costs and fuel for the average American." There should be no adjustment for better airbags or bluetooth, nor a reverse adjustment for taking into account improved automation in factories.
It is very much not obvious to me because it’s not true. Critical safety features like airbags (required by US law in 1999) and ABS (required by US law in 2000) were not standard in cars back then, which is a huge incentive to junk a car.
Since then, mandatory safety features include traction control (2011) and backup cameras (2018), and idk about you, but I’m fine driving a car without Either of those things, but not ABS or Airbags.
Honestly, if you’re going to have such strong opinions about cars, maybe do research into them.
And to your amortization point, literally amortization means “cost over useful life” so we agree?
And please look at the link on my other comment [0] because that is not how car prices are adjusted by the BLS
[0] https://www.bls.gov/cpi/quality-adjustment/new-vehicles.pdf
To my original post (the second part), the BLS primarily measures the spending of people who never save a substantial portion of their income. Vehicles are a necessity for most of these people, so they are going to stretch out the lifetimes of their vehicles if the prices increase relative to their wages. Furthermore, people who might have bought a Camry with some upgrades in 1998 might be relegated to a stock Corolla in 2020. Sure, things are getting nicer all the time, but it's getting easier to make things all the time, too. Technology goes both ways, and at the end of the day, it's still a car. If they took out the rear airbags and removed all of the cheap microcontrollers, would the price really drop 40%?
The way the BLS does its survey does not account for preference changes due to price increases. When wealth inequality is constant, it's probably a decent measure. But even then, it's a political metric and the Big Mac index is the best, simple metric we have for true inflation (which has been consistently higher than CPI for decades).