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To: LLCF who wrote (58562)	1/17/2001 11:15:18 AM
From: Moominoid	Read Replies (1) \| Respond to of 436258

If it really is a better car. Obviously that's difficult to measure but assuming there is no change is probably more incorrect. There are so many problems with national accounting statistics... for example it is assumed that there are no productivity improvements (or deteriorations) in government services. In general measuring output in the service sectors is difficult and has a bigger impact on the statistics than perhaps inaccurate quality adjustments of manufactured goods.

To: LLCF who wrote (58562)	1/17/2001 11:43:41 AM
From: Oblomov	Read Replies (1) \| Respond to 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.