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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (183221)	3/27/2014 11:24:28 AM
From: Biomaven	1 Recommendation Recommended By KyrosL Read Replies (2) \| Respond to of 206181

>>you lost that argument I didn't "lose that argument" - I just pointed out that this guy has an ax to grind, is trying to sell newsletters and is thus hardly a disinterested observer. As best I can tell his main argument is that the move from a constant basket to a hedonic measure is a problem. So that comes down to the problem of how you reflect product improvements and product substitutions. So let's take a concrete example - say TVs. Back in 1960, the "standard" TV was a small black-and-white set; now it is a large color flat screen TV with way better resolution, with a very similar (or maybe even lower) constant-dollar price. It's quite unclear to me how he handles that change - he just talks along the lines of "maybe people don't actually want a better TV." Or to take an even harder example (which actually works in the opposite direction) - how do you reflect the fact that some people are prepared to pay much higher prices for produce labeled "organic?" If you use his methodology you just ignore the new category and assume everyone buys the same produce they used to. That would have the effect of understating the index. How he handles totally new categories like cell phones is beyond me - maybe he compares cell phone bills with what people used to spend on pay phones. Well the MIT project is designed to address some of these issues - it simply looks at online prices over time for the same products. Because it looks at billions of prices it smooths out the hiccups and changes in individual products. And it tracks the "official" CPI pretty darn well. I think we've done this topic to death right now so this will be my last post on the subject. Peter