The Hocus-Pocus of CPI: How economists transform a 400% price increase into a 7% decline

[Occam's Banana]

The prices don't matter because they haven't changed.

again.

Then what does it have to do with inflation (let alone "hedonics" adjustments to CPI numbers)?

That people choose to buy more or less expensive items as their personal incomes increase or decrease has nothing to do with how inflation is calculated.

It's cheaper than ribeye and if I'd used beans or chicken as the comparison then people would complain that it wasn't equivalent to the TV example.

Based on your prices ($4 and $10) then that's 250% inflation in the price of meat, all of which would be measured in the month of April.

The essential fatuity of expressing inflation in the manner you have done here is the whole point of the OP article. The only difference is that you have not deepened the fatuity by attempting to engineer a fictional historical price for fictional meat by applying "hedonics" regression (as the BLS does with respect to televisions, by its own example).

It makes no sense to try to measure price inflation by taking the price of one particular kind of meat (cube steak) at one time (January) and comparing it to the price of some other, entirely different kind of meat (ribeye) at some other time (April) while the first kind of meat (cube steak) is still readily available at the later point (April). IOW: Your cube-steak-vs.-ribeye scenario is not a valid analogy to the comparison of the erstwhile price of CRT televisions to the present price of plasma TVs*. The purchase of CRT televisions is no longer predominantly "typical" (as it once was) for "ideal consumers," and you would have to go out of your way to find such TVs today (assuming they even still make them for the retail market). That is not the case for cube steaks.

Thus, you must do one of the following:
(1) compare the price of cube steak in January vs. the price of cube steak in April, or
(2) compare the price of ribeye in January vs. the price of ribeye in April, or
(3) compare the average of the prices of a "basket" of meats (beef, pork, chicken, fish, etc.) purchased by "ideal consumers" in January vs. the average of the prices for the same things in April.

And at any rate, as far as I know "hedonics" adjustments are not applied to meat cuts, so none of this has anything at all to do with the bogus use of "hedonics" as a fudge factor in order to conceal inflation by trying to make it appear as though the prices of certain "typical" consumer goods (such as TVs) purchased by "ideal consumers" have gone slightly down instead of significantly up.



* And note that the problem is not that the BLS compares erstwhile CRT prices to present plasma prices. That is (or can be) a sensible thing to do, as each was or is a "typical" TV for its time. The problem is that the BLS compares present "typical" (plasma) prices not to previous "typical" (CRT) prices, but rather to the entirely fictional and "back extrapolated" prices that they claim present plasma TVs would have had when CRTs were prevalent (but did not actually have, because present plasms TVs did not even exist then). Since the prices of present plasma TVs would ceteris paribus likely have been much higher had such devices been available then, this all but guarantees an apparent decrease in pirces. IOW: It's not that they are comparing apples to oranges, it is that they are comparing apples to non-existent apples that have been conjured up from out of nowhere ...