Question

Do you think the Consumer Price Index is an effective measure of inflation?

If not, how would you change it? Is there a particular methodology or school of thought you would follow here?

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patio11's avatar
a year ago

I don't have extremely developed thoughts here. Broadly, I think economic measurement is hard.

An example: the impact of the Internet existing broadly doesn't show up in GDP numbers... but shouldn't it? We are far better off for having it than not having it. We're far better off that Google exists. We're far better off that the entire sum of human knowledge is accessible via your cell phone, to a degree far greater than the marginal increase in cell phone bills since 1990.

4 points
steve66319990's avatar
@steve66319990 (replying to @patio11 )
a year ago

I have an under developed theory for why the Internet doesn't show up in GDP. It sounds something like a reverse Parkinson's law. I think people used to produce more out of sheer boredom. You had to find things to do to fill your day. Now you can have the sum total of humankinds knowledge curated to your unique tastes, so we all spend a lot more time just browsing the internet instead of producing.

1 point
ptotterm's avatar
@ptotterm (replying to @patio11 )
a year ago

GDP is bad according to its developer: "The modern concept of GDP was first developed by Simon Kuznets for a US Congress report in 1934.[11] In this report, Kuznets warned against its use as a measure of welfar"

1 point

This question is part of an AMA with Patrick McKenzie.

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