How shrinkflation is playing havoc with economists’ models
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Re: How shrinkflation is playing havoc with economists’ models
#2[deleted]
Re: How shrinkflation is playing havoc with economists’ models
#3I can’t read the whole thing can someone tell me how this matters in the HN universe
Re: How shrinkflation is playing havoc with economists’ models
#4This is a process Brazilians know well.
Chocolate bars used to have 200g. Some now have less than 100g. Toilet paper rolls used to have 50m; most now have 30m and some have only 10m.
This sort of thing started happening in the 1980s, because the government had frozen prices (that always works well). It became such a problem that now the law says that the packaging must clearly point out if the quantity inside has changed.
Re: How shrinkflation is playing havoc with economists’ models
#5This is a process Brazilians know well. Chocolate bars used to have 200g. Some now have less than 100g. Toilet paper rolls used to have 50m; most now have 30m and some have only 10m. This sort of thing started happening in the 1980s, because the government had frozen prices (that always works well). It became such a problem that now the law says that the packaging must clearly point out if the quantity inside has cha…
> now the law says that the packaging must clearly point out if the quantity inside has changed.
We need this law in the US. I’m not one to push for new regulations, but I have seen this happen time and again with big companies (Nabisco, General Mills) that shrink their boxes and count on the customer not to notice.
Re: How shrinkflation is playing havoc with economists’ models
#6This is a process Brazilians know well. Chocolate bars used to have 200g. Some now have less than 100g. Toilet paper rolls used to have 50m; most now have 30m and some have only 10m. This sort of thing started happening in the 1980s, because the government had frozen prices (that always works well). It became such a problem that now the law says that the packaging must clearly point out if the quantity inside has cha…
I'd also like to see a law passed that requires each product to mention on its packaging if its ingredients (even just their relative proportions) have changed. This would apply to things like foods/drinks and also cleaning products.
Of course companies would protest, claiming that their recipes are trade secrets, but we already require that products list their ingredients, and we protect trademarks for products, which seems unreasonable if companies can alter the contents of what is being protected, without telling customers.
To be clear, though, I'm not actually advocating that the labels report precise amounts of each ingredient, but they should be forced to say something like "40% more salt" or "70% more water", at least next to the ingredients, and "New recipe" on the front (as many products already do).
Re: How shrinkflation is playing havoc with economists’ models
#7>The uncertainty principle If it happens on a sufficiently large scale, the practice of tweaking quality in lieu of price could play havoc with essential economic data. Statistical agencies do their best to account for changing product quality, but if adjustments are unexpectedly common or subtle then muted inflation figures could easily be concealing a more turbulent economic picture. Central banks watching for big swings in inflation or wage growth as a sign of trouble could be reacting to figures that bear far less relation to business conditions than they used to.
>What’s more, the substitution of quality for price as firms’ main way of responding to changing market conditions weakens the case for keeping inflation low and stable. Inflation makes relative prices less informative, economists reckon, making it harder to decide what to buy and how to spend. Rather than clarity, low inflation has brought a different sort of confusion: one of shrinking chocolate bars and lost holidays.
What has long been suspected by those outside the field, and rarely acknowledged by economists and statisticians inside the field. Consumer Price Index (CPI), a standard methodology of nearly every national bureau of statistics and economic measurement is susceptible to manipulation and gaming by producers and retailers because the statistical agencies employ limited resources to perform quality adjustments to the item price data.
The adjustment methodology is quite limited in what adjustments are made and the resources dedicated to comparing items and differences—there is no lab testing being performed and the most extensive research performed on some items is using product brochure data to make adjustments based on listed features at face value only (the brochure says this is better or comes with better features).
Often product data is limited so no adjustments are made, only assumptions like “we believe this product has the same quality or content” or “we will impute the missing price or data based on similarly available data or some kind of modeling abstraction.”
This standard methodology led by the U.S. BLS and other agencies has done a complete disservice to the reputability of economics as a hard science instead of a bureaucratic ideology.
Re: How shrinkflation is playing havoc with economists’ models
#8This is a process Brazilians know well. Chocolate bars used to have 200g. Some now have less than 100g. Toilet paper rolls used to have 50m; most now have 30m and some have only 10m. This sort of thing started happening in the 1980s, because the government had frozen prices (that always works well). It became such a problem that now the law says that the packaging must clearly point out if the quantity inside has cha…
I'd also like to see a law passed that requires each product to mention on its packaging if its ingredients (even just their relative proportions) have changed. This would apply to things like foods/drinks and also cleaning products. Of course companies would protest, claiming that their recipes are trade secrets, but we already require that products list their ingredients, and we protect trademarks for products, whi…
> I'd also like to see a law passed that requires
So your "contribution" would be to use the threat of force to make producers spend even more money to redesign more complex labels which, all other things being equal, would result in even an smaller quantity of a product for the same price?
Congratulations, you're qualified to work for government (or The Economist)!
Re: How shrinkflation is playing havoc with economists’ models
#9>The uncertainty principle If it happens on a sufficiently large scale, the practice of tweaking quality in lieu of price could play havoc with essential economic data. Statistical agencies do their best to account for changing product quality, but if adjustments are unexpectedly common or subtle then muted inflation figures could easily be concealing a more turbulent economic picture. Central banks watching for big…
[deleted]
Re: How shrinkflation is playing havoc with economists’ models
#10>The uncertainty principle If it happens on a sufficiently large scale, the practice of tweaking quality in lieu of price could play havoc with essential economic data. Statistical agencies do their best to account for changing product quality, but if adjustments are unexpectedly common or subtle then muted inflation figures could easily be concealing a more turbulent economic picture. Central banks watching for big…
> rarely acknowledged by economists and statisticians inside the field.
This is complete false. If you ever took an Econ 101 course, you'd know the fallibility of economic stats are covered at length.