This is in line with my experience as well, although I haven't lived in London 20 years. One thing which is easy to check was the history of council tax (this is the equivalent of property/municipal/state tax in the UK), where I live. The data can be found here and here. The conclusion is that there has been a cumulative increase of arnd 1.9x between tax year 1993-94 and tax year 2016-17 (23 years of history), which, if my arithmetic is correct, is an annual rate of 2.8%. That's roughly in line with UK CPI and/or RPI.
Again as per my earlier post, pointing to 3-4 items that you have a problem with in a index of 500 proves nothing but your a priori bias. A reasonable person would not make a big deal about less than 1% of an index, but instead would note the few items and seek to find out what they are exactly instead of writing off the whole thing. Re what the website says concerning the methodology, it could have phrased things better, but again, Ed Butowsky said in a recent interview explaining his methodology that the index is weighted by % of income spent on the category. Are you just going to ignore that? And your point is? Now, let's assume that "council taxes" have been going up over the same period at a mere 2% in comparison. What difference does it make to the US consumer who has seen house prices rise by 7 to 17% annually over 35 years (see The Economist chart above/link below)? http://www.economist.com/blogs/graphicdetail/2015/11/daily-chart-0 The government has introduced discretion in the analysis by adding methodological layers to the calculation of price increases that it should not have, again, by Occam's razor. Ultimately no matter what the formulae used are, someone has to decide whether substitution will be a part of the method, or how to go about making hedonic adjustments, if at all. Then there are the further arbitrary and unjustifiable method changes such as that of 1983 where the BLS went from tracking housing prices as they should, and replaced with that misleading concept of OER. Now, speaking of your academics who have studied, examined and discussed in great detail by a great number of people, I trust you are familiar with the logical fallacy called "argument from authority". Without common sense, it doesn't amount to a hill of beans. This one takes the cake, lol. Are you serious? a conservative by definition is not a socialist. A conservative cannot be a socialist by the law of non contradiction and common sense. Pains me to even have to spell this out for you, but we do live in strange times. If you can neither confirm or deny the existence of a single conservative who gives to charity with the right motives, it therefore follows that you should refrain from labeling others as socialists (as you did with me earlier in the thread). For all you know, according to your definition of a socialist (someone who cares about the interests of others) which I reject completely, and playing by your rules, I might be a conservative who gives to charity with the right motives. And no, the burden of proof is on YOU, because you are the one who started with this nonsense of calling me a socialist. What in the dickens do this have to do with CPI and the reckless monetary policies that have wrecked economies globally? No charade here, only calling your lack of critical thinking on the matter of CPI to the mat. And your past 'contributions' didn't have much substance. But I'm glad the types of ideas on inflation that you and likeminded adhere were examined in this thread again.
I have already mentioned what happens when even a fraction of the items in the index are undefined, but you seem to have missed that. That's fine, be selective if you so desire. Right, so why don't we try and settle our doubts regarding the methodology? Let's take the actual data and attempt to reproduce the calculation. I am certain that someone who graduated from Wharton and worked for Stanley would make everything extremely transparent and accessible to peer review, all scientific-like and stuff. Alas, I don't see any actual data on the website! Strange, don't you think? I have already made my point. You seem to have, yet again, ignored it. There is no point in a discussion like this. On the subject of "council tax", you're correct, it has nothing to do with the US consumer. That was my response to a different poster regarding how prices have increased in the UK. As far as I am aware, there is no such thing as "council tax" in the US. Any formula choice would introduce some sort of a bias into the calculation. Why are you happy to accept choices made by Ed Butowsky for his index, but not the government's? As to hedonic adjustments (I knew this was going to come up at some point), here's a simple question. What do you propose should happen if the product whose price is being measured is no longer sold in the marketplace? What do you think Ed Butowsky does? On the "arbitrary and unjustifiable" bit, see above. Finally, you didn't read my post carefully enough. When did I ever mention "academics"? I mentioned that the issue have been discussed and examined by a "great number of people". It is therefore obvious that I wasn't "arguing from authority", but rather, if anything, "from quantity". I am surprised that you're so poorly informed. I thought you were a big fan of the Austrian economists and yet you appear to be unfamiliar with what Hayek, Rothbard and others have written on the subject. In fact, Rothbard specifically refers to what he calls as the "right-wing strand of Socialism". If you would like some more information on this, Google will help. As to calling you a socialist, why not? You seem to care a great deal about the injustice perpetrated on certain parts of society by evil governments (through their abuse of inflation measurements and reckless monetary policies). Hmmm, methinks with regards to lack of critical thinking, we got ourselves a bit of a pot calling kettle black issue here. As to my past contributions, you seemed to have trouble finding them, so how were you able to form an opinion so handily?
No, you either missed what I said in response to this unfounded charge or you haven't been reading. Either way, you need to pay attention and get your head out of the clouds and down to earth. See #43 on page 5 of this thread where I said: "It is obvious that the "sales" is a typo, when considering that the other 499 items are defined and are only intended to give an indication of what is being tracked and not the exact item's description. (They track the exact item's price movements over time)" There's your double standard again. Can you show me the raw prices/items/data and the step by step process by which the government uses to compute inflation on over 60,000 items? I want to see links please, not links to the CPI numbers themselves, but rather the numbers that go into making the sausage that is CPI or CPI-U or whatever. Earlier in this thread, you charged Ed Butowsky of putting out the Chapwood Index for monetary gain. When I asked you if you held the US govt to the same standard you said you questioned the BLS as much as everything else without every questioning whether the govt might be adopting its CPI methodology for monetary gain. But curiously, all of your attacks are aimed at ShadowStats, Chapwood Index, David Stockman et all. Talk about the pot calling the kettle black! I'm sure the readers can connect the dots. I was simply killing two birds with one stone. By council tax I meant property tax in the US, and showed that it is YOU who is being selective by randomly pointing out one item that you happen to have noticed hasn't gone up as much.Why the cherry picking? Why don't you focus on the things that weigh heaviest on the bottom line such as mortgage/house price per sq foot, health insurance, education, vehicles? Do you have any comment on The Economist's chart which goes back to 1980? People would take you a lot more seriously if at least pretended to try to be balanced in your analysis. But you're embrassingly lopsided. I don't disagree that any formula requires discretionary input. The whole point however is to choose the simplest solution to the problem (without loss of efficiency) by Occam's Razor once again, which you have never answered in this thread, you just keep babbling on. See, I thought you were a science fan, apparently not. I've spent this whole thread explaining to you why the govt's approach doesn't cut mustard. Re hedonic adjustments, the solution is to optimize your basket such that you would have the least amount of adjustments to make. Track and weight the budget-heaviest items that affect consumers the most such as mortgage/house price per sq foot, health insurance, education, vehicles, then add the others, food/groceries, toiletries and other staples, consumer discretionary items etc. There is absolutely no need to track 60,000 items. Use the KISS principle as much as is possible and by George, please keep your common sense about you at all times. Which reminds me: Healthcare is currently weighted at less than 5% in the BLS' CPI basket. Does that make sense to you? It's a yes or no answer. http://soberlook.com/2014/10/how-well-does-cpi-measure-individuals.html You asked me to read your old posts, correct? Which I did. And in the "Bernanke QE2 Averts Deflation" thread, you said this: "I know that because I have actually looked at the academic literature on the subject. Do you want references to papers that discuss these issues?" So, yes, you were arguing from authority. Re your quantity argument, ain't worth a hill of beans without common sense. Reminds me of that half joke: "How many economists does I take to change a light bulb? Just one, because it gets really screwed." Btw, do share the papers you are referencing, I'd like to take a look. I believe the Austrian school of thought has great merit in regards to economic theory, more precisely as to the determination of interest rates and the causes of inflation. But that doesn't mean that I endorse everything they have ever said, that's a poor but not surprising inference on your part. And I was using conservative in a general sense, not in the sense that Rothbard would have defined it with his many distinctions. First, the socialist's answer to the injustice foisted upon people by the government incompetence is more government. I advocate for less government. So your labeling is contradictory. Second, caring about the effects of government incompetence on people is something that millions of conservatives in this country do. One need not be a socialist to do so. Do you acknowledge this fact? If you cannot acknowledge this it only shows you're bat crazy partisan. If you say I don't know conservatives' motives then I will say to you in response that by the same token you cannot know socialists' motives at which point you have no argument left in claiming that I am a socialist. Yes? So which nonsense answer of yours will it be? Third, re why not call you a socialist? Because it has nothing to do with the topic of this thread as I've said before. I think your lack of critical thinking has been established. Didn't have any trouble finding them, and as I said, you have offered very little substance in your older posts and also in this thread.
OK, suit yourself. "Sales" is a typo, so is "Lunch", "Bluetooth", "surround sound", "Property" and "Skating Ring Admission" (now that's a genuine typo). There are many more such items, but let's move on. Why don't you help me with the data for all these items, as I have requested? I have already told you. You gots to press them buttons. For instance, you can find the raw data for June here (you have to scroll to pages 144 and onwards for price data). The step by step process is summarized in the same document and also described in detail in various specific methodological notes. When John Williams, Ed Butowsky et al provide a similar amount and granularity of information, I'd be happy to have a discussion about the relative merits of their methodologies compared to that used by the BLS. My mention of council tax in the UK has nothing to do with our discussion. As to the house prices, I have already told you. If you were to use the cost of housing as captured by the monthly principal and mortgage interest payments, you would get a lower number than what's shown by the OER method in CPI over large periods of time. This would also be the case if you were to choose the "repeat-rent" method, as well as some others. And did you not see me mention the AIER EPI a few times, which attempts to do what you suggest? The reason I look at it is that the people behind it make a coherent logical case. Well, you have so far failed to demonstrate to me that your "simplest solution" produces no loss of efficiency. Given we're all fans of science here, I am eagerly awaiting the moment when you provide me with actual evidence that the "simple" methodologies are better. How do you know what affects consumers the most? Don't you think that the composition of the basket should reflect actual consumption as reported by the consumers? That would seem to be a common sense approach, wouldn't you agree? No, your statement doesn't make sense to me, since it's false. The article you have linked to states very specifically that "currently CPI-MED accounts for 5.825% of the overall CPI" (that was the case in 2014). As of Dec 2015, the weight is 8.375% (see page 4 of this document). I did ask you to read my old posts for specific purposes. I certainly didn't expect you to start responding to my past comments, rather than my present ones. Are you trying to tell me that the people discussing these subjects all lack common sense? That you're the sole repository of this precious quality in all economics? Here, here, here, here, here, etc... Let me know if you need more. I never inferred that you would endorse it. That is a poor inference on your part. I am just surprised that you're not familiar with the idea of "right-wing" or "conservative socialism", which the Austrians, in particular, have written quite a bit about. Contradictory, eh? Maybe, this will help. I enjoy calling you a socialist. It's fun. You can call me a socialist as well, if it floats your boat. You're certainly entitled to think however you wish.
I will get to the rest of your post later, but for now, on the basis of what data do you offer the above claim? Also, what is "large periods of time"?
As long as you don't accuse me of appealing to authority... You can find some info here, here and here.
I didn't ask for papers in my prior question. I asked for data. What data support your claim that "the cost of housing as captured by the monthly principal and mortgage interest payments, you would get a lower number than what's shown by the OER method in CPI over large periods of time." ? Or if the data is included in one of the papers, please show me in what paper you've linked to and what page.
Ah, if you don't like the papers, the data can be obtained here (you may have to pay) or here (you may have to massage it) or here.
So you are indeed referring to this claim which uses NAR data? "For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period." from http://www.bls.gov/cpi/cpiqa.htm