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Current Inflation Has Different Effects on Different Age Groups

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Re: Current Inflation Has Different Effects on Different Age Groups

#81

Post by smallnamespace »

j-c-hewitt wrote: post #67
smallnamespace wrote: post #22

Earlier quoted context omitted.

We can certainly argue the technical merits of how they created their 'generation-weighted price index', but differential impacts of inflation seems plausible on the face of it. If you are looking for work in a big city, and big city real estate prices are growing much faster than nationwide, that is a real effect.

Well... sort of, but why call it 'inflation'? That certain age groups tended to act in certain ways and were impacted by differences in price trends in different ways -- that's accurate. What's misleading or confusing is to then redefining the already-muddled term of 'inflation' from an absolute index to multiple indices and then trying to say that because Index B went up more than Index A that some group of people w…

> why call it 'inflation'

Sibling comment also asks this question, so I'll just respond here: inflation measures the purchasing power of some nominal currency, but that measurement is always relative to a basket of goods.

CPI is a basket of 'typical' consumer goods that an average person might buy. But if you're not the average consumer, then in what sense is CPI relevant to you, rather than to a macroeconomist?

I agree that there's a risk of confusion, but I think the confusion is inherent in what we're trying to measure (I have some dollars, how much stuff [that I care about] can I buy with them?), and not mainly a function of terminological confusion.

You could imagine a service like Mint that has all your spending data and calculating your own 'personal CPI', privacy considerations notwithstanding.

Re: Current Inflation Has Different Effects on Different Age Groups

#82

Post by nimish »

organsnyder wrote: post #11
pkaye wrote: post #8

Earlier quoted context omitted.

Not all prescriptions are for expensive medicines. I'd say many of them are generic drugs which cost pennies per day.

In many cases, drug companies come up with ways to keep prices high. For instance, asthma drugs are reconfigured with different delivery mechanisms that allow them to get new patents for what are essentially long-ago-discovered drugs. For instance, the CFC ban in 2008 caused generic albuterol to go off the market: https://www.scientificamerican.com/article/unlikely-victims-...

> Although the FDA advisory committee recognized that the expenses would go up, Hendeles says, it also believed that the companies would help defray the added costs for individuals.

If that's the naïveté of the officials who police the health industry, I'm not surprised that healthcare costs have exploded. Why bother competing when you can have your competition ruled illegal and the ensuing oligopoly allowed with a pinky-swear to not fuck over patients?

Re: Current Inflation Has Different Effects on Different Age Groups

#83

Post by jessaustin »

majormajor wrote: post #38
aphextron wrote: post #21

Earlier quoted context omitted.

>Where do you live, and what on earth are you spending your money on? Bay area ~$5,000 net monthly $2500 Rent/PGE $1000 Car/Insurance/Gas/Parking/Phone/Internet $500 Food/Clothing $500 IRA That leaves ~$500 monthly discretionary income, which I usually try to save as much as possible but inevitably gets eaten up by all the stupid little things in life that cost too much nowadays. I can't even imagine supporting a fam…

I'd consider that too low a salary premium to justify Bay Area rent. There's an aspect of "because people are willing to put up with it" to "why are prices so high in some areas."

Lots of people in the Bay Area make less than that. If they left, there would be many difficulties.

Re: Current Inflation Has Different Effects on Different Age Groups

#84

Post by elihu »

3pt14159 wrote: post #10
taurath wrote: post #3

I wonder how much higher it would be if medical costs were taken out. Housing is the biggest problem for my generation, but it gets almost no traction nor solution.

Housing is largely a problem to do with interest rates and mortgages inflating the land. The actual construction materials themselves (at least here in Canada) aren't too bad. I keep wondering why someone doesn't kickstarter a town. It has all the right incentives. Make guidelines that enforce density in the core and do common sense things from day 1, like wire fibre to every domicile.

I think it could be done, but you would need to have a lot of pieces come together the right way.

For instance: having a partnership with a University and/or several employers that want to setup a new campus, a large enough number of people willing to move, adequate funding to buy several square miles of wilderness and install some initial roads and infrastructure, a favorable local government that's on-board with the plan and doesn't want to throw up administrative roadblocks, a neighboring pre-existing community that can help bootstrap the infrastructure that doesn't mind another town moving in next door, and someone willing to run the whole thing as a non-profit rather than a money-making endeavor.

The upside if it attains critical mass is that the profit on the sale of buildable lots could finance a lot of the necessary infrastructure.

Re: Current Inflation Has Different Effects on Different Age Groups

#85

Post by throwaway2048 »

smallnamespace wrote: post #81
j-c-hewitt wrote: post #67

Earlier quoted context omitted.

Well... sort of, but why call it 'inflation'? That certain age groups tended to act in certain ways and were impacted by differences in price trends in different ways -- that's accurate. What's misleading or confusing is to then redefining the already-muddled term of 'inflation' from an absolute index to multiple indices and then trying to say that because Index B went up more than Index A that some group of people w…

> why call it 'inflation' Sibling comment also asks this question, so I'll just respond here: inflation measures the purchasing power of some nominal currency, but that measurement is always relative to a basket of goods . CPI is a basket of 'typical' consumer goods that an average person might buy. But if you're not the average consumer, then in what sense is CPI relevant to you, rather than to a macroeconomist? I a…

not to mention CPI dosent include costs like education, housing or healthcare, which is completely absurd.

Re: Current Inflation Has Different Effects on Different Age Groups

#86

Post by throwaway2048 »

majormajor wrote: post #32
3pt14159 wrote: post #10

Earlier quoted context omitted.

Housing is largely a problem to do with interest rates and mortgages inflating the land. The actual construction materials themselves (at least here in Canada) aren't too bad. I keep wondering why someone doesn't kickstarter a town. It has all the right incentives. Make guidelines that enforce density in the core and do common sense things from day 1, like wire fibre to every domicile.

There are already quite a few cheap places people could move to. But the demand is increasingly geographically concentrated, instead.

there are few jobs or opportunities in cheap places, its not like everyone lives in large cities because they are unwilling to entertain alternatives.

Re: Current Inflation Has Different Effects on Different Age Groups

#87

Post by xtian »

smichel17 wrote: post #39
xtian wrote: post #19

Earlier quoted context omitted.

If you are making $90k and living in SF you should be looking at studios or for roommates, not at one bedrooms. A one bedroom in a city like SF is a luxury.

Isn't that kind of the point of the original comment? That cost of living rises by location in almost perfect parallel to wages? So even though they make a relative lot of money, their standard of living doesn't actually increase much.

No, your standard of living absolutely won’t increase. I would actually say almost everyone living in that kind of city is (perhaps unknowingly?) choosing to sacrifice in that column. Depending on what you value, however, your quality of life may increase dramatically. And any efforts in frugality will likely yield a greater absolute return than they would in a less costly locale.

Re: Current Inflation Has Different Effects on Different Age Groups

#88

Post by maxerickson »

3pt14159 wrote: post #10
taurath wrote: post #3

I wonder how much higher it would be if medical costs were taken out. Housing is the biggest problem for my generation, but it gets almost no traction nor solution.

Housing is largely a problem to do with interest rates and mortgages inflating the land. The actual construction materials themselves (at least here in Canada) aren't too bad. I keep wondering why someone doesn't kickstarter a town. It has all the right incentives. Make guidelines that enforce density in the core and do common sense things from day 1, like wire fibre to every domicile.

Pretty huge developments happen all the time. People generally want there to be jobs though, which I think is the bigger problem if you tried to do it in an undeveloped region.

Re: Current Inflation Has Different Effects on Different Age Groups

#89

Post by repiret »

WhompingWindows wrote: post #37

This strikes me as lazy data science and full of overreaching conclusions, because nowhere is uncertainty/spread/variance discussed. What are the errors/variance on these estimations for each year and each spending category? Are these inflation differences statistically significantly different? Comparing 7% vs 8% is already cutting it close without even knowing this crucial information. The headline vastly oversteps…

In general I agree that more reporting should include measures of uncertainty. But I also think there are cases when talking about inflation where uncertainty measures are inappropriate.

You can have uncertainty in the average price of avocados, or in the number of avocados that millennials consume on average. But those aren't very holistic views of inflation.

If I define my holistic measure of inflation to be the CPI, then there's no margin of error. Its just a number that the Bureau of Labor Statistics publishes every month. I can say, for example, that the CPI for June 2009 was exactly 215.693. Or that the CPI increased by 1.47%, exact to the nearest 0.01%, between March 2012 and 2013.

On the other hand, if you want to ask whether the CPI is any good as a measure of inflation, then in general inflation isn't precisely enough defined to talk about that with a simple margin of error. There is no exact definition of inflation that we're trying to approximate, so we can't say things like "we're 95% confident that the actual inflation value was between 1.4% and 1.5%".

Re: Current Inflation Has Different Effects on Different Age Groups

#90

Post by aphextron »

refurb wrote: post #51
aphextron wrote: post #21

Earlier quoted context omitted.

>Where do you live, and what on earth are you spending your money on? Bay area ~$5,000 net monthly $2500 Rent/PGE $1000 Car/Insurance/Gas/Parking/Phone/Internet $500 Food/Clothing $500 IRA That leaves ~$500 monthly discretionary income, which I usually try to save as much as possible but inevitably gets eaten up by all the stupid little things in life that cost too much nowadays. I can't even imagine supporting a fam…

Socking away 10% of your take home income for retirement is not "barely making it". Also, do you have a 401k contribution coming out as well? I assume the $500 IRA is a Roth IRA? By that same argument I could make $200K, sock $5000 per month away in savings and say "I only have $500 in discretionary funds each month! I'm barely making it!"

That's basically my point though. I'm doing just OK, not getting rich or anything, just not worried about bills and able to save for a retirement. But this used to be the standard for American families. Not the 90th percentile outlier. The economy has changed so fundamentally that it's either get rich or die.
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