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Politics : Foreign Affairs Discussion Group
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To: Sun Tzu who wrote (264129)5/14/2008 9:14:49 PM
From: TimF  Read Replies (2) of 281500
 
The government says steak is now too expensive and we gather that most people would opt out of it to buy hamburger.

No it doesn't, at least not as part of the CPI calculation.

If it finds more people buy hamburger it will adjust the CPI to make hamburger a bigger part, but food preferences in many cases have shifted to the more expensive, not the less expensive. People buy less bulk food, buy more of their food in restaurants and are more likely to buy premium and/or organic food.

WRONG because the whole point is to have had a fixed frame of reference so you can tell how expensive the *same* basket of goods have become.

Should the CPI be based on changes in prices of horse drawn carriages, petticoats, and mechanical pocket watches?
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