Ep. 80: Hedonic Adjustment and Why You Shouldn’t Hate It

2023-09-07

“Hedonic adjustment” is a curse word among those who think that inflation figures are all scrubbed to look nice by the Bureau of Labor Statistics (if they are, the BLS did a pretty rotten job of it over the last couple of years!), but it is not nearly as sinister as you might think it is. In this episode, the Inflation Guy goes inside-baseball again to explain hedonic adjustment, and the offsetting effect that no one ever seems to complain about because it pushes inflation higher. It's okay to hate inf...

“Hedonic adjustment” is a curse word among those who think that inflation figures are all scrubbed to look nice by the Bureau of Labor Statistics (if they are, the BLS did a pretty rotten job of it over the last couple of years!), but it is not nearly as sinister as you might think it is. In this episode, the Inflation Guy goes inside-baseball again to explain hedonic adjustment, and the offsetting effect that no one ever seems to complain about because it pushes inflation higher.

It's okay to hate inflation, but don't blame hedonic adjustment! Or the Inflation Guy. He's just the messenger.

NOTES

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Podcast Callback: Ep. 4: The Making of an Inflation Index

Website reference: BLS Link to Hedonic Adjustment Q&A

Website reference: BLS Link to Hedonic Adjustment for Men’s Suits

Research reference: Johnson, D.S., S.B. Reed, and K.J. Stewart . 2006. “Price Measurement in the United States: a Decade Aftert he Boskin Report.” Monthly Labor Review 129 (5): 10–19.

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