August 19th, 2015


Interesting Links for 19-08-2015

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cards of love

Thinking about inflation

I was looking at this graph:


and thinking about how inflation is calculated.

Leaving aside that the richest are doing better out of the last fifty years than the poorest, the middle quintile getting only 20% better off since 1965 seems...unlikely.

And thinking about it further, if we calculate inflation based on a basket of produce, does anyone know if it takes into account the quality of said produce? A VW Beetle and a Nissan Versa are both about $10,000 (adjusting for inflation), but the quality of the modern car is miles beyond the quality of the 1960s one. Housing prices have been remarkably stable for the last fifty years*, but we no longer have whole blocks with outside toilets, and minimum quality standards seem higher to me.**

And that's leaving aside things like computers, which continue to get cheaper every year (or better, depending on how you look at it).

The question is, I guess, is there any way of including the increases in quality in inflation? Is there anyone out there who is doing that? Can you compare what a $10,000 car to what something truly equivalent would have cost fifty years ago, or is it simply impossible because things have changed too much?***

And if you include the advances of medicine, which I don't have to pay for, how much better off am I now than I would have been at the same level of society in 1960?

*apart from the odd ridiculous blip.
**Although I don't know the details on that. I know there are still _awful_ places out there, but I'd hope that there are less than there were fifty years ago.
***You can't say "What would a car with GPS and ABS have cost?" because such things would be alien magic-tech.

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