{"id":1466,"date":"2014-11-12T06:59:00","date_gmt":"2014-11-12T11:59:00","guid":{"rendered":"http:\/\/olduvai.ca\/?p=1466"},"modified":"2014-11-12T06:59:00","modified_gmt":"2014-11-12T11:59:00","slug":"estimating-the-effect-of-hedonic-quality-adjustments-on-the-consumer-price-index-the-consumer-price-illusion","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=1466","title":{"rendered":"Estimating the Effect of Hedonic Quality Adjustments on the Consumer Price Index | The Consumer Price Illusion"},"content":{"rendered":"<p><a href=\"http:\/\/priceillusion.wordpress.com\/2014\/11\/11\/estimating-the-effect-of-hedonic-quality-adjustments-on-the-consumer-price-index\/\">Estimating the Effect of Hedonic Quality Adjustments on the Consumer Price Index | The Consumer Price Illusion<\/a>.<\/p>\n<p style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px 0px 30px 0px; border: 0px initial initial;\">Having an informed debate over\u00a0<a style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; color: #444444; padding: 0px; margin: 0px; border: 0px initial initial;\" title=\"Manipulating the Consumer Price Index: Hedonic Quality Adjustments\" href=\"http:\/\/priceillusion.wordpress.com\/2014\/11\/04\/manipulating-the-consumer-price-index-hedonic-quality-adjustments\/\" target=\"_blank\">Hedonic Quality Adjustments<\/a>\u00a0is difficult due to the lack of comparable consumer price indices. A few exist, however, and<strong style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: bold; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px; border: 0px initial initial;\">today we will look at an index\u00a0<\/strong>compiled by\u00a0<a style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; color: #444444; padding: 0px; margin: 0px; border: 0px initial initial;\" href=\"http:\/\/bpp.mit.edu\/usa\/\" target=\"_blank\">PriceStats, an off-shoot of MIT\u2019s Billion Prices Project<\/a>,<strong style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: bold; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px; border: 0px initial initial;\">\u00a0which scrapes the internet for prices and compiles a daily index that aims to track inflation in real-time<\/strong>.<\/p>\n<p style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px 0px 30px 0px; border: 0px initial initial;\">The time series eschews hedonic and seasonal adjustments and\u00a0<strong style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: bold; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px; border: 0px initial initial;\">relies on sampling over 5 million products to produce a very different look at inflation<\/strong>\u00a0(CPI included for comparison):<\/p>\n<p style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px 0px 30px 0px; border: 0px initial initial;\"><a style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; color: #444444; padding: 0px; margin: 0px; border: 0px initial initial;\" href=\"https:\/\/priceillusion.files.wordpress.com\/2014\/11\/price_series.png\"><img decoding=\"async\" class=\"size-full wp-image-69 aligncenter\" style=\"box-sizing: border-box; height: auto; max-width: 100%; clear: both; display: block; margin: 30px auto 30px auto; border: 0px initial initial;\" src=\"https:\/\/priceillusion.files.wordpress.com\/2014\/11\/price_series.png?w=1008\" alt=\"price_series\" \/><\/a><\/p>\n<p style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px 0px 30px 0px; border: 0px initial initial;\">Since starting calculation of the index in mid-2008, PriceStats inflation series<strong style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: bold; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px; border: 0px initial initial;\">\u00a0has remained consistently above the CPI as reported by the BLS<\/strong>. Considering the differences in methodology this provides an estimate to how much Hedonic Quality Adjustments have been used to understate the head-line CPI figures. Currently,\u00a0<strong style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: bold; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px; border: 0px initial initial;\">the CPI uses\u00a0<a style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; color: #444444; padding: 0px; margin: 0px; border: 0px initial initial;\" title=\"32% of the Products Used in BLS Consumer Price Index Subject to Hedonic Quality Adjustments\" href=\"http:\/\/priceillusion.wordpress.com\/2014\/11\/07\/32-of-the-products-used-in-bls-consumer-price-index-subject-to-hedonic-quality-adjustments\/\" target=\"_blank\">quality adjustments on over 32% of the items<\/a>\u00a0used in its calculation.\u00a0<\/strong><\/p>\n<p style=\"box-sizing: border-box; font-family: inherit; font-size: 18px; font-style: inherit; font-weight: inherit; outline-width: 0px; outline-style: initial; outline-color: initial; vertical-align: baseline; padding: 0px; margin: 0px 0px 30px 0px; border: 0px initial initial;\">&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Estimating the Effect of Hedonic Quality Adjustments on the Consumer Price Index | The Consumer Price Illusion. Having an informed debate over\u00a0Hedonic Quality Adjustments\u00a0is difficult due to the lack of comparable consumer price indices. A few exist, however, andtoday we will look at an index\u00a0compiled by\u00a0PriceStats, an off-shoot of MIT\u2019s Billion Prices Project,\u00a0which scrapes the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1055,172,1054,1056],"class_list":["post-1466","post","type-post","status-publish","format-standard","hentry","category-economics","tag-consumer-price-index","tag-cpi","tag-hedonic-adjustments","tag-statistical-manipulation"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1466"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1466\/revisions"}],"predecessor-version":[{"id":1467,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1466\/revisions\/1467"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}