The Inflation Myth and the Wonderful World of Deflation by Mark Mobius

Author:Mark Mobius [Mobius, Mark]
Language: eng
Format: epub
ISBN: 9781119741527
Published: 2020-12-21T00:00:00+00:00

The Changing Time and Place Bias

The result is that the official inflation figures are skewed away from how people are actually spending their money. The figures are also affected by the fact that the times between updating the market basket list may be too long, particularly in view of the speed at which new products and services are being offered. Finally, the inflation researchers do not revise the index backward in time when updating the market basket, so, in essence, they are comparing apples and oranges.

In the US, two sources were used to obtain quantitative data. The Census Bureau conducted a “Point of Purchase Survey” (POPS), which was a survey of households to identify the distribution of household expenditures in various outlets. Then the BLS, on the basis of that data, selected a sample of outlets according to the outlets’ shares in total expenditures in the particular survey area for a particular item. After the outlet's sample was determined, the BLS researchers visited each selected outlet and choose one or more specific items (such as a particular brand of soap powder) to be priced. Any specific item's chance of being selected was based on its share of the outlet's revenue, so the more popular items would have a better chance of being selected. The procedure of outlet and item selection was part of the sample rotation process which periodically refreshed the sample.

Although the BLS tried to reprice exactly the same items from month to month, it was often not possible either because a previously priced item had sold out, or was discontinued or unavailable for one reason or another. This could happen quite frequently, particularly when it came to women's clothing with its frequent style changes. Imagine trying to find the same item in the “fast fashion” stores of H&M, Forever 21, or Zara. When an item was not found, a new one was substituted by a BLS researcher. The BLS had a set of guidelines that should be used to find direct comparisons. Then, if a direct comparison couldn't be found, a new item was used with the price adjusted accordingly. But both of these decisions were highly subjective ones, taken by the particular researcher.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.