Sorry that I got into this discussion. Should have never joined. What a waste of precious time. I am out of here
What you claimed is wrong. You stated: I gave you a stat from the US Census that claims 60% of all adult males are fathers. Willing to bet on a similar number for % of adult females that are mothers. Therefore, the majority of people in the US have or will have children if reproduction rates remain the same as they are today. I suspect that the birth rates will be lower in the future, but for now, and what is relevant to the child care argument, those are the numbers to use. You could not even provide a source for your data. If you want to have a discussion and someone questions your source, then it is your responsibility to provide a source otherwise you're just making it up. Your constant personal attacks not only towards me, but virtually everyone on this forum highlight the weakness in your arguments. Why even bother to say that? You just wasted more of your "precious" time. Sig put more thought into his response so I'll give him more consideration... I agree with that. My point here is that the CPI is a very complex model. The more complex a model becomes and the more assumptions go into the model, the easier it is to, not necessarily intentionally, introduce bias. Let's try some numbers. What's the average cost of college for a 4 year degree today? According to college board, it ranges somewhere between $10,230 for in-state and $35,830 for private per year. That is only tuition and fees, not room and board. https://trends.collegeboard.org/col...ublished-undergraduate-charges-sector-2018-19 I don't know how much the average student pays, but let's take the low end at $10,230. Over 4 years, that's $40,920. Given that the average student loan debt is over $38k (source cited above), I think that estimate is on the low end. According to CPI weighting data: https://www.bls.gov/cpi/tables/relative-importance/2018.pdf Let's take the category: "College tuition and fees" which is given a weighting of 1.627 for CPI-U and 1.036 for CPI-W. Take the average and call it 1.33. As you pointed out with child care and as also applies for college tuition, the argument is that the weighting is low because the cost of college is a significant expense, it's only paid during a relative short time of one's life. The CPI weightings are supposed to reflect that. So if that's the case, if we assume that the 1.33 (out of 100) weighting is actually reflective of college tuition and fee expenditures on average, what does that imply about total spending over the course of one's life? First, not everyone goes to college. According to the BLS, "69.7 percent of 2016 high school graduates enrolled in college in October 2016" (https://www.bls.gov/opub/ted/2017/69-point-7-percent-of-2016-high-school-graduates-enrolled-in-college-in-october-2016.htm). So let's adjust the 1.33 weighting to reflect only those who went to college. 1.33 / 0.697 = 1.91. For those who did not go to college, obviously their weighting for college tuition and fees would be 0. The college attendance rate was much lower in the past, but CPI is supposed to reflect current spending and the ratio should be adjusted for current data. Also, it's not possible to pay for college with pre-tax dollars (even 529 plans do not exempt federal tax) so that $40,920 must be adjusted to reflect the amount of money that must have been earned pre-tax to pay for college. Let's use 15% tax rate as a conservative estimate. So $40,920 * 1.15 = $47,058. If 1.91 is an accurate CPI weighting for those who went to college for a 4-year degree, then what does the CPI imply that they, on average spend over the course of their lives? $47,058 / 0.0191 = $2,463,769. If the average person who went to college and got a 4 year degree earned $2,463,769 (pre-tax) over the course of their life, then the CPI weighting for tuition and fees makes sense. But assuming that the average person works for 30 years, that equates to $82,125 / year. But the average person with a bachelor's degree only makes $59,124 per year (https://smartasset.com/retirement/the-average-salary-by-education-level). That's a big gap and I used very favorable conditions for the cost of college. I assumed all pay in-state tuition and no one goes to private school. I also left out room and board which would double the total expense (assume that falls under the housing category). Also, many people go to school and do not graduate. So unless they are Bill Gates, their wages will likely be lower than average, but they still paid costs to college. Some of the gap could be made up by savings and investments, but the median 401k balance in the US currently at age 60 is only $60,000 (https://www.nerdwallet.com/article/investing/the-average-401k-balance-by-age) and much lower at younger ages which is not enough to make up the delta. Anyhow, that's why I question some of the weightings. I worked out a similar calculation for medical care, but it's too long to go through here and involves more assumptions than I needed to make for college. Since this post is getting very long, I'll try to keep the rest short. For your other points, I think they are valid. However, your flip phone example was a bit extreme. That's an example of a technology that improved a lot over 25 years. Do most products improve that much over that time span? Today you can buy a 8K television. They apparently have twice the resolution over the 4K televisions commonly found today. The BLS claims to use manufacturer cost data to determine the additional benefit of quality of the new products. I bet that the 8K television costs significantly more to produce now than the 4Ks because it is new technology and the panel defects on those 8Ks are likely much higher than the 4Ks. Surely that cost will come down over time, but for now, I'm willing to bet that it's significantly higher. So the BLS could claim that the 8Ks deliver a lot more quality / value than the 4Ks and that should be considered into the inflation adjustment. But do the 8Ks really deliver much more value than the 4Ks? Can most people sitting at a typical distance even determine the difference between a 4K vs. 8K television? I suspect not. Comparing a 5 lb package of flour to 4 lb package of flour, sure, easy linear adjustment to account for the difference in quantity. But I don't think it's that easy to do with a lot of products covered in the estimate. Those uncertainties and adjustments also allow the potential for manipulation to achieve a desired result. Without claiming that it is intentional, it's a lot easier to produce a desired outcome with a complicated model vs. a simple model.
We disagree only in degree or nuance on most of this I think. I would argue that the distribution curve of actual price paid by college students for college ends on the right with the list price with a mean that's substantially lower. i.e. no-one pays more than the list price, but most pay less. For example, Stanford's undergrad tuition is officially around $50K.....but, if your parents make less than $125,000 a year, tuition is $0. And 95% of Americans make less than $125,000 a year (https://graphics.wsj.com/what-percent/) If your parents make less than $65,000 a year, tuition, room, and board are all free. Obviously an extreme example, but using listed tuition rates isn't a sound strategy either. As for student loan, I've seen that up close. It's not necessarily directly correlated to tuition rates, however it is highly correlated to how much a student finances their lifestyle and what that lifestyle is during the time they're in school. A massive chunk of student loans go to pay for things other than tuition. Anyway, food for thought. Thanks for the intelligent well-thought out reply.
Thanks Sig, I appreciate your points. I realized after I posted that I forgot to factor in student loan borrowing costs into my previous calculation although that would be hard to do without knowing how much was borrowed and the rate of repayment which is highly variable. I did not know that Stanford based tuition on parents earning power. I coincidentally heard about this on the radio today: https://www.nbcnews.com/news/us-new...ir-kids-qualify-financial-aid-report-n1036241 I think this is somewhat of an article designed to stir up controversy and not many parents are actually doing it. However, with the Stanford example, if it's a hard cutoff right at $125k, in some situations, it might make sense for one parent to retire early so that family income is lower and the student can qualify for the tuition break. Then in that case, Stanford is basically paying for a parent's early retirement. Or, if the family makes slightly above $125k per year, but lives in San Jose...that can be tough. If the family were to do as the article above suggests and transfer custody of the student to, say grandparents or another family member who earn under the threshold, then both the parents and student are financially better off. Otherwise, maybe the student takes out a loan to pay for college, and gets no breaks on tuition, room and board and graduates with substantial student debt. Given that tuition, room and board runs about $62k per year at Stanford, I can understand the financial incentive. I don't know a good solution for that. Of course, anyone graduating from there should do well.
Yeah, I don't know of anyone who was engaged in that kind of gaming, although their certainly may have been some. I'm guessing they get enough back when they're alumni that it's all a wash. You can do a lot with a $25B endowment for a school with 7,000 undergrads.
How many students that attend Stamford fit under the $0 tuition category? How many students use student loans to finance their lifestyle rather than education?
Assuming you meant Stanford, they don't publish how many pay zero tuition but they do publish that about half receive need based aid which totals $162M a year (https://news.stanford.edu/2018/12/0...income-families-trustees-set-2019-20-tuition/) If you do some rough math, 7,000 students at $50k a year full price would be $350M so if they give out $165M in "financial aid" which is really just a discount in tuition then actual paid tuition turns out to be about half of the list price. Which is my entire point, the list price is meaningless if you're measuring inflation impact. And yes, as I stated before much of student loan debt went to finance students livings costs while attending school. So to use outstanding loan debt as an education inflation measure would also be highly inaccurate.
I see words. I read words. I don't see answers to my two questions. So I have no choice but to believe you MSU.
I didn’t go to Stanford, however, I worked in school to pay off some loans and reworked grants and scholarships so they sent cash . A couple paid directly to bank account and didn’t do anything afterwards... I basically financed my loans through scholarships. I know that sounds weird, but the total amount of scholarships didn’t total the amount of education related costs. Plus, the way it worked was that the money coming in would go for the following semester, which I didn’t like.