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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: LLCF who wrote (58562)1/17/2001 11:43:41 AM
From: Oblomov  Read Replies (1) of 436258
 
>>How can you justify an automobile priced the same as last years model being counted as a drop in CPI [ceterus paribus]?

The problem is that ceteris NON paribus. In my view, the problem is not in the use of quality adjustments in calculating the CPI, but rather in the fact that any assessment of quality has subjective components. For example, if a phone in 2001 has speed dial as a standard feature, is it "better" than a 1989 phone without speed dial? Not for me, since I never use the feature. But to another person, it might be a valuable feature. So, if the addition of speed dial as a standard feature means that one is "getting more for the same nominal dollars," then in what sense is this true? On average? How is the value of it measured?

Some improvements are certainly less subjective, such as the innovation of anti-lock brakes, for example. In such a case, the incidence of fatality and property damage can be measured more objectively.
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