the hedonic adjustment lie in detail
In 1991-2 (or so) I bought a 386/16, 4 mbs ram with a 14" monitor, 100mb hard drive, 16 color graphics card, floppy and win 3.0 for $1300.
In 2000 I bought PIII 600 w/128mbs ram, 30 Gig hard drive, CD writer, CD player, floppy, sound, speakers, NIC card, graphics card capable of 32 bit color at 1024 and 120mhz with a 17" multisynch monitor for $750.
Please tell me how is hedonic pricing distorting the massive inflation in this picture?
My husband and I paid approximately $200 each more in gas this last year......but the vacation we paid $3200 for last year is now on sale for $1800.
I bought a used car for $12,500 this last year. The same price I paid for a new one in 1989. Only the one I bought this year has anti-lock breaks, fuel injection, heavier suspension, side impact panels, keyless entry and a safety record that is 3 times better than that 1989 car I had (still have as a third car). Neither need a tuneup until 100,000 miles (as opposed to those nice big heavy American cars the author remembers as superior)
I'm one of those totally anal retentive people that tracks our family budget down to the dollar. I haven't raised the amount to put into the joint account (the account we use to pay all living and entertainment expenses) in 6 years before that it was almost 8 years that this amount stayed the same. The only reason I raised it six years ago was because we moved into a house that cost twice as much as our old one. I only raised the amount we put in the account by 12% because the interest rates were so low on the new loan (and we got a shorter term). The quality of our living has risen considerably (as well as our net worth) in those six years with no increase in total spending. This is only possible because while some things are going up (medical costs, gas), others are falling through the floor. And like the article points out, I make a switch to a cheaper item (the used car as opposed to the new one). The insurance company raised my rates and I got a new company at a lower rate.....and I got more insurance. I flew to California on a non-stop round trip flight for less than I spent in 1978 on World Airways (the cheapest flight there was back then). I still start my workers out at $10/hour which I did ten years ago.....which is $3/hour better than the other labs in town! I haven't raised my print prices in ten years and every time my suppliers raise their prices they've rolled them back with discounts within weeks.
Where is all this inflation that the government is hiding?
Of course, I don't live in California. |
