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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: LowtherAcademy who wrote (83633)	9/18/2000 4:53:36 PM
From: Dennis O'Bell	Respond to of 132070

How one supposedly "quantifies" this is beyond me william-king.www.drexel.edu ----- This sort of index is known as a "hedonic" index. The term comes from the same root as "hedonism," the philosophy that holds that the pursuit of pleasure is the highest good. The index is an attempt to measure the "pleasure" that the person gets from buying the good. This approach has other applications to markets for goods that vary in quality. For example, a hedonic index has been used to find out whether American consumers prefer imported cars from particular countries, after allowing for observable differences in quality. (The finding was that, in the 1970's at least, they did prefer imported cars from some particular countries). The hedonic approach is also used in measuring inflation. For example, we pay more for cars now than in the 1950's. How much of that reflects higher prices, and how much -- if any -- reflects improvement in the quality of the cars? Without a "hedonic" index, to allow for changes in quality, we would be unable to answer that question. -----

To: LowtherAcademy who wrote (83633)	9/18/2000 11:27:35 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Lew, this goes back to how the government faked Computer contributions to the GDP in the mid 1990s. Basically, the idea was that dollars are not the important measurement tool when you calculate economic growth. It is the Beach Boys facor (Good Vibrations) one gets from the products he owns. Thus, we have growth of computers according to their computational power making up about 50% of growth in GDP from 1994 to the present time. What happened was that computing power zoomed while computer prices tanked, so more people bought more computers that had more power and GDP skyrocketed. However, those of us who watch the dollar amounts realized that this was nearly all fake. If you buy 3 850 mhz Athlons for $1200 each instead of the 120 mhz Pentium for $3500, you have really contributed an extra $100 to GDP, or less than 3%, not the nearly 600% increase the computing power counts. While our GDP was really moseying along slower than in Europe, the fake-o reports, using the good vibes concept, showed the US economy as a miracle that was leaving the rest of the world behind. Ever try to buy a big Mac or a gallon of gas with a picture of your 1G microprocessor? Doesn't work. That is the basis behind hedonistic accounting. It is a way to fake economic growth when the real thing isn't happening. So far, despite the screams of everyone in every foreign country (we are the only ones who use this Rube Goldfarb methodology), Americans still think the country is growing gangbusters. Now, don't get me on how the CPI is faked. <g>