The CPI does try to make quality adjustments. Whether the BLS succeeds is
a matter of controversy, but they do try. As an aside, I talk to a lot of
the faceless bureaucrats at BLS, BEA, Census, and elsewhere who produce
these figs, and I've always been impressed with their openness, honesty,
and commitment - so I'm inclined from that experience to assume the best.
An interesting example of quality, price, & the CPI. The airfare
component of the CPI has risen at twice the rate of the overall CPI since
deregulation - mainly because of quality declines, not price increases.
As nonstop flights became one- and two-stop, and as the hub-and-spoke
system lengthened flights, the BLS interpreted these as quality declines,
i.e., disguised price increases. When I asked Alfred Kahn, father of air
dereg, to comment on this some years ago (after he effused about
declining ticket prices), he couldn't believe it, doubted the BLS knew
what it was doing, etc.
Doug
Doug Henwood [[EMAIL PROTECTED]]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)
On Mon, 4 Apr 1994 [EMAIL PROTECTED] wrote:
> How does the CPI numbers reflect quality increases/decreases in a
> product? For example, car engines today have longer-lasting engines and
> are 2-3 time better fuel economy; in health care lots of new surgical
> instruments and techniques such as angioplasty which were not available
> 20 years ago....
>
> Sherman Owens
> [EMAIL PROTECTED]
> Wash. Univ. Sch. Med.
>
