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Code and data for The Economist's Big Mac index

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Re: Code and data for The Economist's Big Mac index

#11

Post by rory096 »

dontdoitpls wrote: post #8

Consumer pricing is the last to get hit with inflation. Why do people use CPI instead of labor, housing, or stock prices to gauge inflation? On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?

>Why do people use CPI instead of labor

How would one differentiate real and nominal wage/salary increases?

>housing

Shelter expenditures presently constitute 33.2% of the CPI basket.

>housing or stock prices

Asset prices are only very loosely associated with inflation.

>On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?

lol. (Also, BLS calculates CPI, not the Fed.)

Re: Code and data for The Economist's Big Mac index

#12

Post by rory096 »

teruakohatu wrote: post #9
dontdoitpls wrote: post #8

Consumer pricing is the last to get hit with inflation. Why do people use CPI instead of labor, housing, or stock prices to gauge inflation? On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?

It is easy to calculate. A gallon of milk today is essentially the same as a gallon of milk 100 years ago. Same with gasoline and cans of beans.

That's not accurate. CPI adjusts both in basket composition and the more nebulous hedonic quality adjustment. The TV you bought for $500 today is not the same as the one you bought for an equivalent price 30 years ago.

Re: Code and data for The Economist's Big Mac index

#13

Post by hn_throwaway_99 »

p1necone wrote: post #7

I suspect the Big Mac index is not super informative in a lot of wealthier areas where the cost of shelter is growing much faster than the cost of food.

I think I'm general inflation indexes are now completely impossible to generalize because (a) inflation has been enormous in some locales and some sectors but (b) the relative price of goods is now so dependent on location.

That is, like you say, in a major city I'd expect a Big Mac to be only slightly more expensive, but I'd expect housing to be astronomical. But outside of probably like 10-15 major metros I'd expect housing to be flat if not negative in huge swaths of the US.

Re: Code and data for The Economist's Big Mac index

#14

Post by jcranmer »

panarky wrote: post #2

This is the way data journalism should be done, kudos! > exchange rates are from Thomson Reuters Sorry to say I'm cynical enough to be surprised that they're allowed to republish this data.

In finance, the data is all public, and the algorithms are all secret. In oil, the data is all secret, and the algorithms are all public.

Re: Code and data for The Economist's Big Mac index

#15

Post by bhl »

dontdoitpls wrote: post #8

Consumer pricing is the last to get hit with inflation. Why do people use CPI instead of labor, housing, or stock prices to gauge inflation? On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?

CPI is computed by the Bureau of Labor Statistics, not the Federal Reserve. As for why labor, housing, and stock prices aren’t included in the CPI, I would guess because: labor is sticky and are only indirectly related to consumption via pricing, housing is a durable good (people don’t buy it week to week nor does rent change with such frequency), and stock prices don’t affect consumption.

You could make the argument that a better inflation indicator could take these into account, but it wouldn’t be the CPI then.

Re: Code and data for The Economist's Big Mac index

#16

Post by yboris »

I bit of a shameless plug for my project: https://income-inequality.info/

Includes all the processing and graph generation code (can even run notebook online): https://github.com/whyboris/Global-Income-Distribution

The world is shockingly unequal in terms of income (and other resources). I love that others are trying to visualize it (e.g. http://www.globalrichlist.com/ and https://www.givingwhatwecan.org/get-involved/how-rich-am-i/ )

Re: Code and data for The Economist's Big Mac index

#17

Post by riffraff »

rory096 wrote: post #12
teruakohatu wrote: post #9

Earlier quoted context omitted.

It is easy to calculate. A gallon of milk today is essentially the same as a gallon of milk 100 years ago. Same with gasoline and cans of beans.

That's not accurate. CPI adjusts both in basket composition and the more nebulous hedonic quality adjustment. The TV you bought for $500 today is not the same as the one you bought for an equivalent price 30 years ago.

it is actually very interesting to see the variations in CPI baskets.

I recall, for example, when the standard basket in Italy used to contain Sambuca[0], and was updated in the '00s to instead include Limoncello[1] due to changed consumer habits.

[0] Anise-flavoured liquor, often added to coffee https://en.wikipedia.org/wiki/Sambuca

[1] Lemon-zest flavoured liquor https://en.wikipedia.org/wiki/Limoncello

Re: Code and data for The Economist's Big Mac index

#20

Post by lowdose »

What would be a reason for irregular intervals of price registration? Could it be that the pricing changed by McDonalds at this interval and wouldn't the dataset be more complete to include the months in which the price of the Big Mac didn't change?

2000-04-01 2001-04-01 2002-04-01 2003-04-01 2004-05-01 2005-06-01 2006-01-01 2006-05-01 2007-01-01 2007-06-01 2008-06-01 2009-07-01 2010-01-01 2010-07-01 2011-07-01 2012-01-01 2012-07-01 2013-01-01 2013-07-01 2014-01-01 2014-07-01 2015-01-01 2015-07-01 2016-01-01 2016-07-01 2017-01-01 2017-07-01 2018-01-01 2018-07-01 2019-01-01 2019-07-09 2020-01-14

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