The Consumer Price Index is a scam at this point, as far as I can tell.
They regularly modify the list of items in the cart, meaning the data isn't reliable over time.
They also include caveats where they can modify the Scritsmier price differences. For example, they attention to adjust the new price to account for what they consider to be added value. Say a product is 15% more expensive one year after a new model is released. When calculated the CPI, they can decide that the new model added 10% more value or benefit to the user, meaning the price only rose by 5%.
I wish I could find the study now, but around 2013 someone compared the CPI listed price increase of magazines to the actual change in the price listed on the cover over something like 20 years. The true value change was around 130% but the CPI had adjusted for value 30%.
Most people seem to be feeling this now when they notice that process have risen much higher than the claimed 4 or 5%.
> The Consumer Price Index is a scam at this point, as far as I can tell.
The BLS goes into excruciating detail about their methodology, which is not something often find scams doing.
The Consumer Price Index is just that, an index. It seeks to distill the complexities of the consumer economy into a single number, and to do so reliably over time. It's impossible to do this without a whole bunch of compromises and trade offs. It's trivial to rip apart any such methodology because of these trade offs - just find a trade off you don't agree with and argue it should be the opposite.
If someone attempted to make a t-shirt using the weighted dimensions of every American, the result would be a t-shirt size that would not fit any individual. But, over time, that t-shirt could be used to understand changes to the American physiology over time.
> For example, they attention to adjust the new price to account for what they consider to be added value.
They cover this in their FAQ [1]. But again, this is a trade off. If laundry detergent becomes more concentrated, thus can do 20% more loads for 10% more price, then how should that be handled? If $1000 Nike shoes become popular, does that mean that the price of shoes increased 10x even if cheaper alternatives are still the same price?
The most successful scams actually do go into excruciating detail to appear methodical, that's how you get people to buy in.
While I do agree with many of the points you raised, for me those point to the uselessness of the CPI as a matric. If the dataset is so complex you can only boil it down so far before too much context is lost. The CPI is an attempt to create a single number of off the entire economy, a task that is impossible made only more clear by complaints over the obvious and egregious tradeoffs made.
Statistics can be useful, it can also be a pointless game of manipulating so much data that you can make it say whatever you want. I think you'd be hard pressed to find an average American that would feel like prices have only gone up by ~4-5% over the last few years.
Except it's not. It's how we calculate inflation, which in turns drives how we measure GDP growth. It's also how we measure productivity and purchasing power variation over time. This measure has a very big impact, including on our assessment of policies and the evolution of the economies of nations.
Off course there can be no absolute value for such a thing, but the problem is that economists have been obsessed with “real” prices and disregarding “nominal” values (you'd notice the irony of naming the arbitrarily constructed thing as “real”), and so almost every economic analysis includes CPI and now everything depends on it so its measurement become included everywhere indirectly. And it is in fact a big problem.
'excruciating detail [...], which is not something often find scams doing'
Except for e.g. the small print in an EULA, or the XXXX pages Congress spending bills. There is definitely a bureaucratic technique of 'obfuscate through sheer volume of irrelevant information'.
Your examples cover one of the problems: When the cheaper same old shoe is rarely on the shelf, then what? And are they as enthusiastic at removing value as they are at adding value (i.e. when then "same old" shoe is not same old but faster wearing)
They actually do describe this "If the BLS data collector is forced to replace a short-sleeve cotton/poly shirt in the CPI sample with a long sleeve 100% cotton shirt..." but they provide no answer aside from [well the one on the shelf now is better].
So that the buyer of the "common" shoe, shirt or TV pays more.
It's easy to argue that it's possible to dig deep and find that "older" cheaper item but that doesn't change that the "basic basket" is now more expensive.
The second problem is one of perception - and perception really matters in this case. And CPI doesn't solve that problem.
The BLS methodology is certainly “elaborate.” But as is pointed out down-thread, the CPI uses completely bizarre measures and makes little attempt to source data from the kind of places that would typically be used to do these analysis were more rigor being demanded or actual money was riding on them being correct.
When people change their habits in life the CPI is changed to reflect what that life costs. Up here in Canada, the CPI is also adjusted from spending surveys:
Do you think coal and lard should be included, like they were in Canada pre-1956? Or do you think the CPI should try to model reality?
> […] meaning the data isn't reliable over time.
It is meaningful in that life now and life ten or twenty or more years ago was different in what people purchased. That should be reflected in measures that model consumer spending.
Spending habits are mitigated by inflation though. For example, I buy significantly less beef than I did five years ago because it is now too expensive. Putting less weight on beef prices because of the reduction in consumption would indicate that inflation is less than it actually is.
If they didn't do those things, then wouldn't we just get a flagrant_taco from an alternate dimension who would instead argue about how CPI doesn't account for changes in consumer preference over time or how a cell phone in 2023 is different from one in 2003?
I think it is a bit of a scam but I do think it had good intentions. CPI is used to grade and since it is a scoring product it is manipulated. One thing you will notice with inflation is that goods that can be outsourced have been what is keeping CPI down. TVs, appliances, etc. Housing, Education, Healthcare are all things the US cannot outsource and there you will see a larger impact on CPI. Food is the on in this theory that I am not sure about. The US grows much of their own food so I wonder if it still fits even though you can outsource.
Food. The technique is to shift from 'locally sourced organic veggies' to 'dorritos made with mass produced GMO corn', because 'consumer preferences have shifted' and both have the same calorie payload. Note how 'preferences have shifted' also discreetly helps to insinuate a moral fault in the people themselves. Anything but 'healthy food has become too damn expensive for the majority of the population'.
I'm curious about how the housing crisis is measured here. As homelessness booms, people are "choosing" to not pay rent. Does that zero out their housing expenditures in a survey?
Although I'm sure that outsourcing made some difference, are we sure most of the benefits didn't just rise to the investor class?
TVs dropped in price due to the benefits of adopting moores law. Look into a modern TV and you see a symphony of integration and cost reduction thanks to moores law. I'd imagine the same applies to anything else that jumped on the moores law bandwagon. We need to measure appliances that benefited from this vs appliances that didn't.
The CPI is reliable over time. When the basket of goods is changed to reflect what consumers actually purchase the index is normalized to maintain continuity.
But on longer time scales it becomes a bit meaningless. Lifestyles were so different 50 years ago that very little is directly comparable beyond certain staple foods. People tend to interpret the CPI numbers based more on their preconceived notions of how things are going than on any objective reality.
> They regularly modify the list of items in the cart, meaning the data isn't reliable over time.
Please show me an economy where the list of goods stay stagnant and don't constantly change.
Unless your CPI is comprised of raw commodities like Iron Ore and Salt and Copper - then you're not going to be able to keep a stagnant list of items.
If x% of consumer food spending was on milk in 1920 and now it's 1/10th x - it doesn't make sense to keep milk with the same weight as it did in 1920.
It's pretty hard to tell if people are drinking less milk now because they're poorer or because they just prefer almond milk (which is more expensive) instead.
So, please, find a better & more cost-effective way to measure inflation. If you do, the government will use it.
Contrary to popular belief, we don't live in the USSR - where our government provides us with blatantly crap data. We just have shill politicians that spin everything into a lie.
> Unless your CPI is comprised of raw commodities like Iron Ore and Salt and Copper
In which case it won’t be a Consumer Price Index at all, as those things in their raw forms (well, salt is close, I guess) aren’t exactly consumer goods.
Of course, we already have industry-specific Producer Price Indexes which cover the raw materials and other inputs used in those industries.
> They regularly modify the list of items in the cart, meaning the data isn't reliable over time.
It may not be reliable over time, but it is reliable over shorter time periods. If the basket is not changed for a few years, then the month-by-month changes in CPI are generally judged as reliable, or as reliable as what is out there. It is when you try to look over a 10, 20, 30 year period where you begin to run into trouble.
According to the article, $1 in housing in 1999 is equivalent to $1.86 today. That's... incredibly hard to believe. The Case Shiller is up over 300% for the same time period.
And $1 in food is $1.84 today? I don't have an index to reference, but also hard to believe.
Restaurant and packaged food (e.g., cookies, frozen meals) prices up an average 30% since 2020 is what I usually think too, but I also think bargains have disappeared, which is probably harder to capture.
It feels like far fewer restaurants have lunch specials than in 2020, for instance, and a lot of cheap restaurants have either raised prices to the norm or closed. Bars and casinos having discounted or free food to get you to drink has gone out the window (even where legal). And looking back 20 years, it feels like far fewer restaurants have small and simple orders available.
For instance, you used to be able to go into a diner or other casual restaurant and get a hamburger or other sandwich with no fries or side. That’s harder to find now. So is cheap, unremarkable coffee and cheap breakfast items, like small pastries or two-egg plates.
Similarly, it’s harder to find a small car, a house or apartment without central air, a 15 inch TV (though TVs have gotten cheaper), etc.
The Whataburger I got way-too-frequently for just under $6 in 2001 is like $10 bucks now.
MSRP of a 99 M3 = 46k; 2023 stating at $74300.
Outside of housing and gas I'm hard-pressed to think of anything that's more than double the cost. GPUs, I suppose, but that's a weird hobby transition + a lot more industrial uses.
That said, housing+gas == huge parts of people's day to day lives, obviously.
Compounding is the 8th wonder in the world for this reason. It's amazing how in the span of a few decades how much prices have gone up. Except for clothes and electronics, everything seems to have gotten way more expensive compared to cpi. but even iPhones still cost a lot. The situation seems out of control for things like tuition .
This probably varies from place to place. A high-quality double cheeseburger in my area can be had for $6.19, and adding tomato is only a little extra. (I checked prices a minute ago, so these numbers are fresh.)
Carl's Jr./Hardee's even advertised "The $6 Burger," which sold for about half that, as a way to say, "Look, you can get a restaurant-quality burger at our fast food chain for leas money."
We plan out meals and so we have dozens of recipes that we rotate through. Keeps things not quite boring while also keeping everything in the minds of everyone in the family so that when we ask what everyone wants for suppers this week they can think of something. Anyway, this is all to say that our grocery habits are fairly consistent. Our bill is up, in the past two years alone, between 30 and 40 percent. I haven't gone back to the old receipts to confirm exactly, but looking back at some old statements confirms that range.
It feels like "covid" and "supply chain issues" were a great excuse to wildly reshuffle prices, item availability, item quality and packaging quantity. ... And yet it doesn't seem visible in corporate profits. It's not very visible where that price difference is going. So I don't know yet. I'm open to useful data (which the current CPIs really are not.)
By this I mean, corporate profits have increased but are still most often (never mind Apple) a small fraction of price in the retail world.
Not that this explains all of the discrepancy between official statistics and what we see in reality, but the average size home has gone up over time, so if you're looking at price per square foot instead of price per home it would account for some of that. The increase in average home size is especially striking given that the average family size is declining.
Real estate prices are only indirectly included in CPI via owner-equivalent rent. Really, CPI is a joke for measuring broad inflation. It measures a specific basket of goods. Treating that basket of goods as the true value of the dollar is absurd.
CPI is ok for specific categories but the basket weighting is absolutely trash. That being said somehow healthcare indexing got messed up and it was down significantly which is silly because healthcare never goes down
These "price comparisons" really need to be divided into specific categories.
$1 from 1999 would be worth a lot more for buying a house, since house prices have gone up insane.
$1 from 1999 would be worth much less for technology: a modern-day phone would be essentially priceless, but if you only care about specs, it could be replicated in a supercomputer, albeit for >$100 million (https://news.ycombinator.com/item?id=21977330)
Even within a category it depends: certain food items (junk food) seem to have gone up in price considerably more than others.
I saw a YT vid that referenced a research paper that used a particular basket of goods to define the quality of life for a peasant in the Roman Empire.
I think the trick is to build your personal consumption basket for essential unchanging goods and use that for comparison. Certain things like the types of food I eat have been reasonably consistent over the past 20 years. So something like "how many calories & grams of protein could I buy in 2003 vs 2023", and then compare that my hypothetical wage growth over that timeframe. Or wow much is a quart of oil? I needed to do oil changes 20 years ago, and still do my own today, etc...
> $1 from 1999 would be worth much less for technology
This is expected given technology is advancing but pricing hasn't changed much if you factor in relative costs to relative performance / outcomes.
For example in 1999-2000 you could have gotten a really solid machine capable of playing Quake 3 (the latest and greatest FPS game of that time) getting a rock solid 125 fps on a CRT monitor capable of doing 120hz for around $650-700.
Realistically a solid machine nowadays with a mid-grade GPU is likely going to run you $1,000 to $1,200 and that could easily be more if you wanted a higher end GPU.
All in all you're talking about a little under double the price which is roughly what an inflation calculator says (1.85x) for the same relative outcome.
I wanted to comment with a similar sentiment, particularly about housing. I think the Case Shiller index is a solid reference. My own anecdotal experienced had me buying a house and selling it 2.5 years later (in 2022) for 72% more than what I paid for it.
> According to the article, $1 in housing in 1999 is equivalent to $1.86 today. That's... incredibly hard to believe. The Case Shiller is up over 300% for the same time period.
Case-Shiller is index of homes-as-an-asset buy prices, the housing component of CPI is housing-as-a-consumed-service rent prices. 1999 was pretty near historical lows for the buy:rent price ratio, today is just off the all-time high, so, yes, now:1999 for buying a home as an asset is very different than now:1999 for consuming housing as a service.
I think many areas saw a significant fall in prices in the 2009 crash, but some hot areas didn't. Those hot areas are probably 3 times as high compared to 1999, but the areas that were more normal might be closer to 1.86.
Sample of one. The house I once lived in sold for $193K in 1999, I sold it for $300K in 2007 (before the housing crash), it's Zillow estimate fell to $230K in 2010. Today the Zillow estimate is $454K. So that is 2.3 the cost.
It’s doing one to one comparison of the comparable homes. Schiller looks at average home price without adjusting for newer homes being much larger and better furnished than the ones built 25 years ago
it is appropriate here to question these numbers carefully -- and, this fits very well to lived experience over 25 years in a place with very high rate of change.. one might say an epicenter of these changes.. the SF Bay Area in California.. from what I read, Los Angeles metro is very similar... Seattle also.. these places I know well and these numbers are real from the ground view.
That's the hard to believe part, it would imply housing costs on average are only up by 86%, but that doesn't seem to be anywhere near accurate in at least large parts of the country (all the ones I looked at least when we considered moving).
but maybe this is true if you factor in cheaper mortgages, lower rates . financing options were worse in 1999 vs 2019. Homes were very cheap in 1970 but way harder to get a good mortgage, too. much more was paid upfront.
Oh, you're assuming that CPI is computed in a rational scientific way. And that "housing" means housing. Neither is true.
Let's take a deep dive into how CPI housing is computed. You would think it could just be "track the price of every home sale in the US", or "track the price of every new rental". Ah, my naive friend, the US Bureau of Labor Statistics lives in the year 1900 as if data, electricity, compute, and statistics don't exist. Anyway, those numbers would be too scary and too objective.
First, the real kicker, CPI housing doesn't measure the cost of a house! At all. Their rationale is that the a house is an investment. So it has no relationship to the Case-Shiller index at all.
What do you measure if you don't measure the cost of housing? Well, you're left measuring rents, but that's not satisfying when a lot of people buy a home. So.. why don't we measure the imaginary rent that someone thinks that their house that they bought 30 years ago might be able to fetch.
3/4ths of the housing index is computed from a single quantity called the "Owners’ equivalent rent of residences". They ask people in a survey: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?”
Let that sink in for a moment. People who aren't renting their home. Who aren't real estate agents. Who have no idea what the cost to rent their home is. Who are homeowners and haven't rented a home in decades probably. "Bob, what do you think this would rent for?" "Ugh, $1400/month" Great! Let's base our entire understanding of the economy on the random answers of clueless people.
But, remember, the Bureau of Labor Statistics needs to do everything like we're in the pre-electricity era cruising around on the latest model of horse. So they can't ask too many people. Only a few thousand people, and they keep asking the same people over and over again. Seriously, they ask the same few thousand people every 6 months what their rent is and what their imaginary rent is. They even admit this doesn't change much. And they admit this means all the data they get is garbage, it's too skewed by the particular properties of those few thousand people they randomly selected once.
They could just ask 100,000 people or at least pick a different group of a few thousand every time? And then everything averages out eventually.
Doing that with your horse and buggy is way too hard. Instead they adjust the junk responses they get for the type of housing, quality, etc. With a whole bunch of magic numbers that come from yet another survey of clueless people, the Department of Energy’s Residential Energy Consumption Survey, which was last run in 2020 (although I think housing CPI is computed with the 2015 run) and asked about 5000 households a bunch of questions + got some billing info from their utilities.
They compute monthly CPI with an amazing formula that I think is the only use of a 6th degree square root I've ever seen in statistics (and I have CS/math degrees and do ML research; it's probably legit, but I'm not working backwards to figure out how they derived this).
Oh, we're done yet! Housing also gets older all the time, we need to correct for this. That's a whole pdf. That I've never read. And I'm not sacrificing my sanity for HN. https://www.bls.gov/cpi/quality-adjustment/updating-housing-... But it has a model from January 1997 with 110 degrees of freedom. That's not confidence inspiring to say the least.
Ok, so we ask clueless people to give us meaningless numbers that we then adjust based on complex largely meaningless formulas to compute an imaginary rent that doesn't exist instead of just looking at the actual cost of housing. How could this get worse? With the magic of "imputation"! A beautiful word from statistics that means "Oh, we didn't collect enough data and we have no idea what the actual number should be, so we're just going to make a number up and pretend like it's a data point we gathered based on some idea of what we think it ought to have been". Because the best data is the data you make up according to your gut.
No one with two neurons to rub together would ever adopt this methodology in the modern world.
Of course none of these numbers match any of the reality that anyone experiences. Their documentation on how anything is computed reads like standup comedy.
It's surprising how much you discount something you don't take the time to understand. Clearly your single set of experiences is superior to the century of work by thousands of professionals, probably all with far more knowledge in this area.
You should start your One True CPI and license it; you'd be rich.
I took a few seconds to understand why the 6th riot was used; it's clearly correct and if you took a moment to understand instead of discounting it, youd learn. Hint: it's 6 things multiplied together - ever hear of geometric means? Similarly I looked at the paper you discounted because the degrees of freedom somehow offended you. It too is a good model. And, as credentials go, I have a PhD and decades of modeling experience. Even so, I'd expect someone with your claimed expertise to be able to understand these.
If there were some vastly better method, traders could make money on the difference. They look at it, and cannot. There's lots of papers and research on this.
Multiple other actors,like the MIT Billion Prices project started, and others followed, measure it, and get equivalent numbers.
So, if you're so sure the BLS is stupid and wrong, there should be some group getting it right. Care to find them?
Another simple experiment you can do (and I've done) is to take a reasonable set of monthly purchases, weight costs like that, go back 40 - 50 years, and pull up ads for those goods. Pop it all in excel, and compute compound inflation over that time. Do it honestly. Then check BLS over that time. TADA! Guess what? It's pretty good. I've even gotten several friends to do this when they claim all this nonsense. They've all been surprised how well it works.
> Well, you're left measuring rents, but that's not satisfying when a lot of people buy a home.
It's perfectly satisfactory when the accepted rationale for many, many home purchases is as an investment vehicle, rather than as just as home (which is what rent covers).
> No one with two neurons to rub together would ever adopt this methodology in the modern world.
You're seriously making the claim that the BLS has nobody with your intelligence in a powerful position?
There is no internationally agreed upon method for housing/shelter, with pros and cons for each:
> International statistical agencies have unanimously adopted the net acquisition approach for durables, but there is no consensus about the best approach to the treatment of OA in the CPI16 (Table 1). Rental equivalence is the most popular approach among countries belonging to the Organisation for Economic Co- operation and Development.17 Johnson’s (2015) recent review of the U.K. CPI proposes using CPIH, which includes the costs of OA and is based on a rental- equivalence approach, as the U.K.’s main measure of inflation. Several countries in the European Union have refrained from incorporating OA into their CPI, although Eurostat is currently conducting a pilot study for the euro area based on the net acquisition approach. Australia and New Zealand use a net acquisition approach, while Sweden and Finland—like Canada—are using a partial user-cost approach. No country has adopted a full-fledged user-cost approach.
People also often confuse the price of the asset (e.g., land) with the price of the home/structure.
> The [US] BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...]
> Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs.
The house (home) is not being sold for one million dollars. The land is being sold for $950K, and the buyer is getting $50K worth of structure.
Similarly if you are a home owner your home/structure depreciates over time so you have to do maintenance on it over time. And because of various shortages (e.g., lumber, plumbing fixtures) the cost of upkeep has gone up. Upkeep is a part of the CPI: the "C" in CPI stands for consumer.
And why the component is called Shelter and not Housing, at least in Canada:
The graph is referencing the Consumer Price Index.
I think that the official inflation numbers given are low to the point of absurdity. Time to dust off criticisms of the CPI... Most likely, no doubt, there's some political deflation of the numbers.
These graphs are just lies based on lies based on lies.
Food prices have basically doubled in a couple of years. Prices for McDonald's have gone from about $5 for a breakfast meal combo to almost $9. I can't go out for dinner in the Bay Area for 2 adults and 2 kids for less than $100.
In 9 years up to 2021, my house price almost tripled. That is inflation that no one talks about. My new house price that I bought in 2021 is down 15%. This is deflation that no one talks about... yet.
The government skews numbers because they allow consumers to "trade down" to lower quality, cheaper products so that inflation doesn't look like it's going up. This doesn't capture the fact that the product is much, much lower quality. If you compare a real Big Mac to today's Big Mac, it's a pale comparison. Same goes for just about everything else. What use to be "regular" is now considered premium, and that inflation doesn't get captured over the decades.
The Bay Area is not America. In Philadelphia, for example, entrees at a nice restaurant downtown are about $15, while I fed three adults at a bar in the suburbs for $40.
The government isn't lying to you with CPI, you just live in an outlier city.
No, same meal cost much less before. We go to the same restaurants and know how much prices went up. The restaurant owners of the ones we visit often all say the same thing, they had to cut down on quality while still raising prices over the last couple of years, and some had to drop menu items because they were getting too expensive and the risk of wasting food because no one ordered it was too high.
Inflation numbers are nationwide, but bay-area housing prices are not. And high housing raises the costs of all labor-intensive services (like your McDonalds), since employees need somewhere to live.
I work at a convenience store. We have a penny jar. Except about four months ago people starting leaving dimes, nickels and quarters. It was not a gradual change, people hardly ever left more than pennies. And it is not just one or two people.
My take is that nothing less than a dollar bill is worth much anymore. Part of this is could be the issue of cash vs card, but my uneven sample says that ratio is not really changing.
And what can you buy for $0.25? Nothing. $0.50? Nothing. Not a cheap drink, not a cup of coffee. For a dollar? Still nothing.
The US used to have a half penny but it was eliminated when it had more purchasing power than a modern dime. There’s been talk of getting rid of the penny my entire adult life, but we don’t really seem to make improvements anymore, so I imagine it will remain.
The US seems to have entered a stasis of coinage (and bill) denomination since before I was born (a long time ago). Besides getting rid of the penny, pretty much every attempt to introduce new currency (like $1 coins) have failed. And I wouldn't count on being able to use anything bigger than a $20 bill at a random location.
And, at this point, cash use is in sufficient decline that I can't imagine any serious effort to make changes.
Canada no longer has pennies. Canadians now seem a little surprised that we still have them. Comically, US banks accept Canadian pennies so people are using them up as much as possible.
Really, that's a real shame if it is. I havent been back the US since late 2014. I remember walking around Manhattan near Times Square I think, just exploring and seen so many signs for $1 slice of Pizza, I think it tad more with some sales tax thing applied when I had one, another breakfast time I got bagel with cream cheese from one of the vans I think near one of the big banks near wall street I think $1.50-$2.00. I was staying in a top-end hotel courtesy of a company I was interviewing with but unsure of expense policy I just got the food around and about myself and found it extremely cheap if you were a little careful. How much has this changed? My memory of facts could be a little off, but I always had US down for cheap plates of mountains of food, and takeaways that were next to nothing price wise.
It didn't really got more expensive because salaries have increased as well. Maybe for a tourist coming from a country that hasn't seen that much inflation (Japan?)
I'm almost surprised that many people carry coins any longer. I have a few bills in my mini-wallet but any coins I end up with get tossed in the coin bucket at home to maybe get redeemed someday. Even quarters aren't generally useful for tolls or parking meters any longer.
There is a coffee shop in SE Alaska that was still selling $0.50 coffee as of Aug 2023. God bless their hearts. -- total anecdote, your point is overwhelmingly true.
That's still a good price. I found a similar thing in Spain for the staple drink of coffee was e1-e1.50 everywhere you went in the Valencia region, didn't matter if high-so or not, arty farty restaurant or workmans cafe, if you wanted a black coffee with a little biscuit on the side it would be under $2 anywhere you went.
Do you all still hand out pennies? I found that pennies were effectively killed off in the COVID coin shortages. I've noticed that some smaller places don't hand out coin change at all.
Yes, I often take the non-pennies out. Not for that reason, but because when someone comes in and doesn't have enough to pay for something basic - like milk, I can use some of the two or three dollars in quarters, dimes and nickels to make up the difference.
I find it fascinating that thirty years ago, the sort of "default" unit of paper currency was a $20 bill — like, ATMs never output tens or fifties, it was always twenties, so you'd probably have a few andrew jacksons in your pocket — but today that's still the go-to.
Walk into any convenience store and try to pay with a fifty dollar bill, you're lucky if they even take bills that large, they won't want to make change, they'll pull out a highlighter to make sure it's real. But it's only worth about twenty bucks to anyone who was around for Nirvana.
A $40 tip is wild unless you’re talking about taking the entire family out to a nice restaurant, lol.
I remember 20 years ago, the general rule was to tip at least 10%, then at some point it changed to 20%. I abide by that. If it was great service, I tip 20%, if it wasn’t very good, I tip 10%.
> The Consumer Price Index (CPI) is like a yardstick that helps us understand how much the cost of everyday things, like groceries or rent, has gone up or down over time.
It is a sign of the madness of monetary policy that raw changes in price are an unsuitable for measuring whether the value of something has gone up or down. Cutting a bit off the yardstick each year doesn't help. They just make it harder to figure out what is happening in the economy.
A house isn’t. Healthcare isn’t. A lunch isn’t. A child’s daycare isn’t. Energy isn’t. Heating isn’t…
Even a car is safer and nicer but the utility is the exact same.
Imagine you need 200 of bricks to fix a wall. You may say that modern brick is 50% better, more insulating whatever. And now your inlation number is 10% instesd of 60%
But I still need the same number of bricks to fill in the hole on the wall. And I have to pay 60% more for it, not 10%. So when it comes to cost of living and surviving in the world, this argument is pure fantasy.
Everyone brings up cell phones but imho they are not that important when looking at rising prices to consumers (technology is deflationary in nature). Food, energy, and housing are what impact consumers the most.
> A cell phone from 2 decades ago is an entirely different product from a cell phone today. That needs to be accounted for.
A cell phone indeed, but for personal computers, the gain we got from the technological advances isn't as clear from a consumer's perspective. Sure there are niche activities like video processing or graphic editing, where the performance improvements allows for things barely imaginable 20 years ago, but for most use case people have, there isn't that many significant difference:
- boot time: despite SSD, consumer PC still take minutes to boot when they aren't brand new with a fresh install.
- web browsing, not even faster.
- Word and Excel, barely changed over the period.
- video games: sure they have more realistic graphics, but that doesn't make them more enjoyable otherwise.
The average house computer is now a laptop that's permanently plugged to the socket (with a long dead battery) instead of a desktop. It takes less room in the house, but also has a much smaller screen, a worse keyboard and no mouse. Is that a net gain?
Let's make a 'tech CPI' separate from 'cost of living CPI'. Most people don't need the latest gadget, and we are starting to realize that most of these gadgets are downright detrimental to our mental, emotional and social health.
That should absolutely not be accounted for. Things are supposed to become cheaper and better every year, except for in situations of massive war or natural disaster. Technological progress and worker education has made the production of goods and services extremely more effective than two decades ago.
Workers for sure have not seen their wages go up, and consumers haven't seen prices go down. Who's stealing the wealth of the world?
It's very pretty but having a stacked graph is really inappropriate.
We don't spend equal amounts on those categories and stacking the graphs obscured the relative changes. There is no analysis worth anything in the text.
Whether the proportion among them is correct is a valid point, but since the extra cost of the different categories is cumulative to the household budget, there is an argument for stacking them. It would make more sense if it were proportional to household spending between categories, but I suppose then some of the categories would be too thin to see the increase.
Exactly my point. If a category becomes 3x more expensive but it only takes up 1% of my expenditure then a stacked graph without proportions is very misleading.
It also assumes that in 2000 you spent exactly the same amount on each of these categories, which is very weird. It would be much more interesting to know the relative amount of need for each category.
I'm confused how this visualization is meant to work.
I would expect I can compare today to an arbitrary time in the past. But the visualization actually shows 2000 vs an arbitrary time in the future. How is that a useful comparison? What is special about 2000?
I don't care about the buying power of a dollar from 2000 in 2015. I do care about the buying power of a dollar from 2015 in 2023.
Readit News
They regularly modify the list of items in the cart, meaning the data isn't reliable over time.
They also include caveats where they can modify the Scritsmier price differences. For example, they attention to adjust the new price to account for what they consider to be added value. Say a product is 15% more expensive one year after a new model is released. When calculated the CPI, they can decide that the new model added 10% more value or benefit to the user, meaning the price only rose by 5%.
I wish I could find the study now, but around 2013 someone compared the CPI listed price increase of magazines to the actual change in the price listed on the cover over something like 20 years. The true value change was around 130% but the CPI had adjusted for value 30%.
Most people seem to be feeling this now when they notice that process have risen much higher than the claimed 4 or 5%.
The BLS goes into excruciating detail about their methodology, which is not something often find scams doing.
The Consumer Price Index is just that, an index. It seeks to distill the complexities of the consumer economy into a single number, and to do so reliably over time. It's impossible to do this without a whole bunch of compromises and trade offs. It's trivial to rip apart any such methodology because of these trade offs - just find a trade off you don't agree with and argue it should be the opposite.
If someone attempted to make a t-shirt using the weighted dimensions of every American, the result would be a t-shirt size that would not fit any individual. But, over time, that t-shirt could be used to understand changes to the American physiology over time.
> For example, they attention to adjust the new price to account for what they consider to be added value.
They cover this in their FAQ [1]. But again, this is a trade off. If laundry detergent becomes more concentrated, thus can do 20% more loads for 10% more price, then how should that be handled? If $1000 Nike shoes become popular, does that mean that the price of shoes increased 10x even if cheaper alternatives are still the same price?
[1] https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
While I do agree with many of the points you raised, for me those point to the uselessness of the CPI as a matric. If the dataset is so complex you can only boil it down so far before too much context is lost. The CPI is an attempt to create a single number of off the entire economy, a task that is impossible made only more clear by complaints over the obvious and egregious tradeoffs made.
Statistics can be useful, it can also be a pointless game of manipulating so much data that you can make it say whatever you want. I think you'd be hard pressed to find an average American that would feel like prices have only gone up by ~4-5% over the last few years.
Except it's not. It's how we calculate inflation, which in turns drives how we measure GDP growth. It's also how we measure productivity and purchasing power variation over time. This measure has a very big impact, including on our assessment of policies and the evolution of the economies of nations.
Off course there can be no absolute value for such a thing, but the problem is that economists have been obsessed with “real” prices and disregarding “nominal” values (you'd notice the irony of naming the arbitrarily constructed thing as “real”), and so almost every economic analysis includes CPI and now everything depends on it so its measurement become included everywhere indirectly. And it is in fact a big problem.
Except for e.g. the small print in an EULA, or the XXXX pages Congress spending bills. There is definitely a bureaucratic technique of 'obfuscate through sheer volume of irrelevant information'.
They actually do describe this "If the BLS data collector is forced to replace a short-sleeve cotton/poly shirt in the CPI sample with a long sleeve 100% cotton shirt..." but they provide no answer aside from [well the one on the shelf now is better].
So that the buyer of the "common" shoe, shirt or TV pays more.
It's easy to argue that it's possible to dig deep and find that "older" cheaper item but that doesn't change that the "basic basket" is now more expensive.
The second problem is one of perception - and perception really matters in this case. And CPI doesn't solve that problem.
Deleted Comment
https://news.ycombinator.com/item?id=37895252
Yes? Of course? They are based on spending surveys:
* https://en.wikipedia.org/wiki/Consumer_Expenditure_Survey
When people change their habits in life the CPI is changed to reflect what that life costs. Up here in Canada, the CPI is also adjusted from spending surveys:
* https://www.statcan.gc.ca/en/survey/household/3508
You can see the list of changes going back to 1913:
* https://www.statcan.gc.ca/en/statistical-programs/document/2...
Do you think coal and lard should be included, like they were in Canada pre-1956? Or do you think the CPI should try to model reality?
> […] meaning the data isn't reliable over time.
It is meaningful in that life now and life ten or twenty or more years ago was different in what people purchased. That should be reflected in measures that model consumer spending.
TVs dropped in price due to the benefits of adopting moores law. Look into a modern TV and you see a symphony of integration and cost reduction thanks to moores law. I'd imagine the same applies to anything else that jumped on the moores law bandwagon. We need to measure appliances that benefited from this vs appliances that didn't.
But on longer time scales it becomes a bit meaningless. Lifestyles were so different 50 years ago that very little is directly comparable beyond certain staple foods. People tend to interpret the CPI numbers based more on their preconceived notions of how things are going than on any objective reality.
Please show me an economy where the list of goods stay stagnant and don't constantly change.
Unless your CPI is comprised of raw commodities like Iron Ore and Salt and Copper - then you're not going to be able to keep a stagnant list of items.
If x% of consumer food spending was on milk in 1920 and now it's 1/10th x - it doesn't make sense to keep milk with the same weight as it did in 1920.
It's pretty hard to tell if people are drinking less milk now because they're poorer or because they just prefer almond milk (which is more expensive) instead.
So, please, find a better & more cost-effective way to measure inflation. If you do, the government will use it.
Contrary to popular belief, we don't live in the USSR - where our government provides us with blatantly crap data. We just have shill politicians that spin everything into a lie.
In which case it won’t be a Consumer Price Index at all, as those things in their raw forms (well, salt is close, I guess) aren’t exactly consumer goods.
Of course, we already have industry-specific Producer Price Indexes which cover the raw materials and other inputs used in those industries.
It may not be reliable over time, but it is reliable over shorter time periods. If the basket is not changed for a few years, then the month-by-month changes in CPI are generally judged as reliable, or as reliable as what is out there. It is when you try to look over a 10, 20, 30 year period where you begin to run into trouble.
And $1 in food is $1.84 today? I don't have an index to reference, but also hard to believe.
Anecdotally, I can remember a burger at a restaurant was about $6 in 1999. Now average seems to be 15 to 20.
I would believe that everything is about 3x the price from 20 years ago. This chart seems to say the average is less than 2x which I don't agree with.
It feels like far fewer restaurants have lunch specials than in 2020, for instance, and a lot of cheap restaurants have either raised prices to the norm or closed. Bars and casinos having discounted or free food to get you to drink has gone out the window (even where legal). And looking back 20 years, it feels like far fewer restaurants have small and simple orders available.
For instance, you used to be able to go into a diner or other casual restaurant and get a hamburger or other sandwich with no fries or side. That’s harder to find now. So is cheap, unremarkable coffee and cheap breakfast items, like small pastries or two-egg plates.
Similarly, it’s harder to find a small car, a house or apartment without central air, a 15 inch TV (though TVs have gotten cheaper), etc.
> Anecdotally, I can remember a burger at a restaurant was about $6 in 1999. Now average seems to be 15 to 20.
When you go to a restaurant, you're mostly buying labor.
It's not a good benchmark for food prices.
MSRP of a 99 M3 = 46k; 2023 stating at $74300.
Outside of housing and gas I'm hard-pressed to think of anything that's more than double the cost. GPUs, I suppose, but that's a weird hobby transition + a lot more industrial uses.
That said, housing+gas == huge parts of people's day to day lives, obviously.
I ate a meal with a drink at Taco Bell for $2-3.
That's just two years. Not 24.
By this I mean, corporate profits have increased but are still most often (never mind Apple) a small fraction of price in the retail world.
$1 from 1999 would be worth a lot more for buying a house, since house prices have gone up insane.
$1 from 1999 would be worth much less for technology: a modern-day phone would be essentially priceless, but if you only care about specs, it could be replicated in a supercomputer, albeit for >$100 million (https://news.ycombinator.com/item?id=21977330)
Even within a category it depends: certain food items (junk food) seem to have gone up in price considerably more than others.
I think the trick is to build your personal consumption basket for essential unchanging goods and use that for comparison. Certain things like the types of food I eat have been reasonably consistent over the past 20 years. So something like "how many calories & grams of protein could I buy in 2003 vs 2023", and then compare that my hypothetical wage growth over that timeframe. Or wow much is a quart of oil? I needed to do oil changes 20 years ago, and still do my own today, etc...
The actual TFA is specifically about this very point!
This is expected given technology is advancing but pricing hasn't changed much if you factor in relative costs to relative performance / outcomes.
For example in 1999-2000 you could have gotten a really solid machine capable of playing Quake 3 (the latest and greatest FPS game of that time) getting a rock solid 125 fps on a CRT monitor capable of doing 120hz for around $650-700.
Realistically a solid machine nowadays with a mid-grade GPU is likely going to run you $1,000 to $1,200 and that could easily be more if you wanted a higher end GPU.
All in all you're talking about a little under double the price which is roughly what an inflation calculator says (1.85x) for the same relative outcome.
Not it doesn't.
This is the primary difference between liquid and non-liquid assets.
Deleted Comment
So they have a category called "Housing" which presumably does not include the price of a home. Very informative and helpful infographic.
Case-Shiller is index of homes-as-an-asset buy prices, the housing component of CPI is housing-as-a-consumed-service rent prices. 1999 was pretty near historical lows for the buy:rent price ratio, today is just off the all-time high, so, yes, now:1999 for buying a home as an asset is very different than now:1999 for consuming housing as a service.
Case-Shiller is up ~220%
Sample of one. The house I once lived in sold for $193K in 1999, I sold it for $300K in 2007 (before the housing crash), it's Zillow estimate fell to $230K in 2010. Today the Zillow estimate is $454K. So that is 2.3 the cost.
Food is definitely way more expensive. Raw foods like Beef, eggs, flour, sugar etc. all has gone up 60-80% in the last two years.
So I definitely believe you when you say it is hard to believe.
Up until 1999/2000, a Burger King Whopper was $1.
Today ~$8
Deleted Comment
Let's take a deep dive into how CPI housing is computed. You would think it could just be "track the price of every home sale in the US", or "track the price of every new rental". Ah, my naive friend, the US Bureau of Labor Statistics lives in the year 1900 as if data, electricity, compute, and statistics don't exist. Anyway, those numbers would be too scary and too objective.
First, the real kicker, CPI housing doesn't measure the cost of a house! At all. Their rationale is that the a house is an investment. So it has no relationship to the Case-Shiller index at all.
What do you measure if you don't measure the cost of housing? Well, you're left measuring rents, but that's not satisfying when a lot of people buy a home. So.. why don't we measure the imaginary rent that someone thinks that their house that they bought 30 years ago might be able to fetch.
3/4ths of the housing index is computed from a single quantity called the "Owners’ equivalent rent of residences". They ask people in a survey: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?”
Let that sink in for a moment. People who aren't renting their home. Who aren't real estate agents. Who have no idea what the cost to rent their home is. Who are homeowners and haven't rented a home in decades probably. "Bob, what do you think this would rent for?" "Ugh, $1400/month" Great! Let's base our entire understanding of the economy on the random answers of clueless people.
But, remember, the Bureau of Labor Statistics needs to do everything like we're in the pre-electricity era cruising around on the latest model of horse. So they can't ask too many people. Only a few thousand people, and they keep asking the same people over and over again. Seriously, they ask the same few thousand people every 6 months what their rent is and what their imaginary rent is. They even admit this doesn't change much. And they admit this means all the data they get is garbage, it's too skewed by the particular properties of those few thousand people they randomly selected once.
They could just ask 100,000 people or at least pick a different group of a few thousand every time? And then everything averages out eventually.
Doing that with your horse and buggy is way too hard. Instead they adjust the junk responses they get for the type of housing, quality, etc. With a whole bunch of magic numbers that come from yet another survey of clueless people, the Department of Energy’s Residential Energy Consumption Survey, which was last run in 2020 (although I think housing CPI is computed with the 2015 run) and asked about 5000 households a bunch of questions + got some billing info from their utilities.
They compute monthly CPI with an amazing formula that I think is the only use of a 6th degree square root I've ever seen in statistics (and I have CS/math degrees and do ML research; it's probably legit, but I'm not working backwards to figure out how they derived this).
Oh, we're done yet! Housing also gets older all the time, we need to correct for this. That's a whole pdf. That I've never read. And I'm not sacrificing my sanity for HN. https://www.bls.gov/cpi/quality-adjustment/updating-housing-... But it has a model from January 1997 with 110 degrees of freedom. That's not confidence inspiring to say the least.
Ok, so we ask clueless people to give us meaningless numbers that we then adjust based on complex largely meaningless formulas to compute an imaginary rent that doesn't exist instead of just looking at the actual cost of housing. How could this get worse? With the magic of "imputation"! A beautiful word from statistics that means "Oh, we didn't collect enough data and we have no idea what the actual number should be, so we're just going to make a number up and pretend like it's a data point we gathered based on some idea of what we think it ought to have been". Because the best data is the data you make up according to your gut.
Feel free to read the horror show for yourself https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
No one with two neurons to rub together would ever adopt this methodology in the modern world.
Of course none of these numbers match any of the reality that anyone experiences. Their documentation on how anything is computed reads like standup comedy.
You should start your One True CPI and license it; you'd be rich.
I took a few seconds to understand why the 6th riot was used; it's clearly correct and if you took a moment to understand instead of discounting it, youd learn. Hint: it's 6 things multiplied together - ever hear of geometric means? Similarly I looked at the paper you discounted because the degrees of freedom somehow offended you. It too is a good model. And, as credentials go, I have a PhD and decades of modeling experience. Even so, I'd expect someone with your claimed expertise to be able to understand these.
If there were some vastly better method, traders could make money on the difference. They look at it, and cannot. There's lots of papers and research on this.
Multiple other actors,like the MIT Billion Prices project started, and others followed, measure it, and get equivalent numbers.
So, if you're so sure the BLS is stupid and wrong, there should be some group getting it right. Care to find them?
Another simple experiment you can do (and I've done) is to take a reasonable set of monthly purchases, weight costs like that, go back 40 - 50 years, and pull up ads for those goods. Pop it all in excel, and compute compound inflation over that time. Do it honestly. Then check BLS over that time. TADA! Guess what? It's pretty good. I've even gotten several friends to do this when they claim all this nonsense. They've all been surprised how well it works.
So simply check it. It's easy.
It's perfectly satisfactory when the accepted rationale for many, many home purchases is as an investment vehicle, rather than as just as home (which is what rent covers).
> No one with two neurons to rub together would ever adopt this methodology in the modern world.
You're seriously making the claim that the BLS has nobody with your intelligence in a powerful position?
* https://www.bls.gov/opub/mlr/1982/06/art2full.pdf
There is no internationally agreed upon method for housing/shelter, with pros and cons for each:
> International statistical agencies have unanimously adopted the net acquisition approach for durables, but there is no consensus about the best approach to the treatment of OA in the CPI16 (Table 1). Rental equivalence is the most popular approach among countries belonging to the Organisation for Economic Co- operation and Development.17 Johnson’s (2015) recent review of the U.K. CPI proposes using CPIH, which includes the costs of OA and is based on a rental- equivalence approach, as the U.K.’s main measure of inflation. Several countries in the European Union have refrained from incorporating OA into their CPI, although Eurostat is currently conducting a pilot study for the euro area based on the net acquisition approach. Australia and New Zealand use a net acquisition approach, while Sweden and Finland—like Canada—are using a partial user-cost approach. No country has adopted a full-fledged user-cost approach.
* https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-r...
In the Canadian CPI paper there is some explanation towards the complexities of shelter / owner accommodation:
* https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-10...
* https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2017001...
People also often confuse the price of the asset (e.g., land) with the price of the home/structure.
> The [US] BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...]
> Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs.
* https://www.pragcap.com/should-house-prices-be-in-the-cpi/
It is a common mistake, for example with this story entitled "This tiny Toronto house is now listed for $1 million":
* https://www.blogto.com/real-estate-toronto/2020/07/tiny-toro...
The house (home) is not being sold for one million dollars. The land is being sold for $950K, and the buyer is getting $50K worth of structure.
Similarly if you are a home owner your home/structure depreciates over time so you have to do maintenance on it over time. And because of various shortages (e.g., lumber, plumbing fixtures) the cost of upkeep has gone up. Upkeep is a part of the CPI: the "C" in CPI stands for consumer.
And why the component is called Shelter and not Housing, at least in Canada:
* https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2017001...
It includes:
* Rent, tenants' insurance, tenants' maitenance
* Mortgage interest cost
* Property taxes
* Homeowners' insurance, maintenance, etc.
* Utilities: water, power, natgas
The consumable portions are housing/shelter are taken into account.
I think that the official inflation numbers given are low to the point of absurdity. Time to dust off criticisms of the CPI... Most likely, no doubt, there's some political deflation of the numbers.
Food prices have basically doubled in a couple of years. Prices for McDonald's have gone from about $5 for a breakfast meal combo to almost $9. I can't go out for dinner in the Bay Area for 2 adults and 2 kids for less than $100.
In 9 years up to 2021, my house price almost tripled. That is inflation that no one talks about. My new house price that I bought in 2021 is down 15%. This is deflation that no one talks about... yet.
The government skews numbers because they allow consumers to "trade down" to lower quality, cheaper products so that inflation doesn't look like it's going up. This doesn't capture the fact that the product is much, much lower quality. If you compare a real Big Mac to today's Big Mac, it's a pale comparison. Same goes for just about everything else. What use to be "regular" is now considered premium, and that inflation doesn't get captured over the decades.
The Bay Area is not America. In Philadelphia, for example, entrees at a nice restaurant downtown are about $15, while I fed three adults at a bar in the suburbs for $40.
The government isn't lying to you with CPI, you just live in an outlier city.
The phone in your pocket, your laptop, your car have all gone up in quality/safety/speed but that also isn’t counted.
My take is that nothing less than a dollar bill is worth much anymore. Part of this is could be the issue of cash vs card, but my uneven sample says that ratio is not really changing.
And what can you buy for $0.25? Nothing. $0.50? Nothing. Not a cheap drink, not a cup of coffee. For a dollar? Still nothing.
And, at this point, cash use is in sufficient decline that I can't imagine any serious effort to make changes.
Walk into any convenience store and try to pay with a fifty dollar bill, you're lucky if they even take bills that large, they won't want to make change, they'll pull out a highlighter to make sure it's real. But it's only worth about twenty bucks to anyone who was around for Nirvana.
Imagine today, paying $50 for any random album you wanted to own.
Meanwhile at Best Buy (and other places I'm sure, but I worked at Best Buy) they were $9-12
I agree with you however I think this shows how poorly people understand inflation.
Inflation from 1993 -> 2023 is 113%
Slipping a waiter an extra $20 has 113% less meaning in 2023 than it did in 1993. You should be slipping a $40 lol
I remember 20 years ago, the general rule was to tip at least 10%, then at some point it changed to 20%. I abide by that. If it was great service, I tip 20%, if it wasn’t very good, I tip 10%.
That $20 has 53% (1 - (1/2.13)) less meaning in 2023 than in 1993.
If it had 113% less meaning, the 2023 meaning/value would be negative and the waiter should rationally turn it down.
It is a sign of the madness of monetary policy that raw changes in price are an unsuitable for measuring whether the value of something has gone up or down. Cutting a bit off the yardstick each year doesn't help. They just make it harder to figure out what is happening in the economy.
Imagine you need 200 of bricks to fix a wall. You may say that modern brick is 50% better, more insulating whatever. And now your inlation number is 10% instesd of 60%
But I still need the same number of bricks to fill in the hole on the wall. And I have to pay 60% more for it, not 10%. So when it comes to cost of living and surviving in the world, this argument is pure fantasy.
A cell phone indeed, but for personal computers, the gain we got from the technological advances isn't as clear from a consumer's perspective. Sure there are niche activities like video processing or graphic editing, where the performance improvements allows for things barely imaginable 20 years ago, but for most use case people have, there isn't that many significant difference:
- boot time: despite SSD, consumer PC still take minutes to boot when they aren't brand new with a fresh install.
- web browsing, not even faster.
- Word and Excel, barely changed over the period.
- video games: sure they have more realistic graphics, but that doesn't make them more enjoyable otherwise.
The average house computer is now a laptop that's permanently plugged to the socket (with a long dead battery) instead of a desktop. It takes less room in the house, but also has a much smaller screen, a worse keyboard and no mouse. Is that a net gain?
Workers for sure have not seen their wages go up, and consumers haven't seen prices go down. Who's stealing the wealth of the world?
We don't spend equal amounts on those categories and stacking the graphs obscured the relative changes. There is no analysis worth anything in the text.
It's just showcasing a pretty graph
I would expect I can compare today to an arbitrary time in the past. But the visualization actually shows 2000 vs an arbitrary time in the future. How is that a useful comparison? What is special about 2000?
I don't care about the buying power of a dollar from 2000 in 2015. I do care about the buying power of a dollar from 2015 in 2023.