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To: J-L-S who wrote (22179)	7/2/2006 9:51:30 AM
From: Moominoid	Respond to of 42834

There is a strong antipathy on the SI boards to the hedonic regression method of computing price indices. I happen to think that this method is in the right direction and probably should be applied more broadly across the different categories of goods in the index. On the other hand I have read some stuff on owner's equivalent rent which was a bit disturbing - surveying home owners on what their house would rent for? Seems to me most wouldn't have a clue. bls.gov But I am an economics professor - and though I am often skeptical of some mainstream economics of course I find this stuff more reasonable than most people think. There is a broader antipathy to mainstream economics in general on SI and many favor the so called Austrian School.

To: J-L-S who wrote (22179)	7/2/2006 12:12:02 PM
From: David Bogdanoff	Read Replies (2) \| Respond to of 42834

Your excessively detailed comments are not informative for me as they are not new for me and contain numerous errors. They are patronizing because they assume that you have superior knowledge. Needless to say, it is tiresome to share viewpoints with you. I will respond to the main point about higher energy prices being a tax. Although there is some similarity to a tax at the gas pump or a sales tax there are also significant differences. One is that some companies can and do pass on the tax in many industries, such as shipping and airlines. Further, the proceeds from a gas tax go to our government and generally is spent domestically, but this is not equally true for energy profits which go to foreign entities to a significant degree. The comparison with a tax is false and serves only to buttress a false argument for higher energy prices not being inflationary canard. Four your information, the housing index shows many communities to price homes out of reach for the incomes in many communities across the nation. It is a mistake to look at the US average for real estate comparisons because real estate markets are local. You 8% interest rate for 1970 is significantly too high; it was more like 5-6%. The 8%+ rates came years later with stagflation. It is true that housing quality is significantly higher than in 1970, so the higher current prices are not entirely attributable to inflation, but even older homes without the amenities have gones up faster than incomes. The 25k mid-peninsula home of 1970 would go for well above 500k now, at least 20x more, without any improvements. BTW decisions of what to include and exclude in the CPI are technical in nature. My use of the term "housing costs" includes costs of rent and cost of a house. Your correction is out of order. Hope that this clarifies the major points. Bogtalk ps If you reply to this, would you state whether you lived in a country with 20%+ inflation and experienced it first hand? I don't think you have. Doing so would give you a different perspective. That's why its so ironic that you should think your knowledge superior to mine.