Current Inflation Has Different Effects on Different Age Groups • Hacker News Board

Re: Current Inflation Has Different Effects on Different Age Groups

#91

Post by goldenkey » Sat, Jun 09, 2018, 2:19 AM UTC

This result shouldn't be surprising to anyone who has thought about what the construct of money/debt actually does.

Every bubble in the history of finance has always been the overvaluing of one asset in exchange for the devaluing of other assets. By overvaluing houses today, we are screwing over every field that requires property/land, retail stores for example. And renters which are predominantly youth. Now, the overvalued houses don't actually consume value directly - they give money to the people who have these assets or are employed in their use - home owners, property management companies - construction companies - etc etc.

Money has always allowed for bias and inequality in resources and work allotted. One sector like housing in exchange for sacrificing other sectors. Or sacrificing one nation/locale's wealth in exchange for another - ie. many 3rd world countries/ exchange rates. Or sacrificing young peoples' prosperity in exchange for old peoples' - inflation / housing / medicare / social security / stock market inflation.

Money is a tool for giving value, and hence prosperity, unequally for any kind of sociological category of people by way of empirical categories of valuables.

I don't hate capitalism but it is unavoidably discriminatory.

The very act of a loan is essentially an exchange of value temporally - why shouldn't the natural consequence be to see money as a way of moving allotted value around both spatially, sociologically, and temporally?

Re: Current Inflation Has Different Effects on Different Age Groups

#92

Post by asfasgasg » Sat, Jun 09, 2018, 3:31 AM UTC

araes wrote: post #64

The claim of a difference is 'slightly' exaggerated (~1%) However, the overall inflation data is quite interesting. - Best tracker of inflation - drinking - Most inflated - Learning and having a roof over your head - Least inflated - Changing location and playing dress-up (you or your home) As always, rent seeking behavior is an issue (or a good investment area). Getting smarter is getting more difficult (or at least…

> rent seeking behavior

So many people are confused about the meaning of this term lately, to the point where I think we might need to scrap it and come up with a new one. In traditional economics, rent-seeking is a bad thing, because it involves lobbying the government to increase one's revenues without performing any economically beneficial function. This is why the term has a negative connotation. Almost all economists think this type of behavior causes inefficiency.

Buying a house and renting it out does not fall under this category. In this case, you are performing a beneficial economic function (i.e. you are providing someone a dwelling, in exchange for money). There are related rent-seeking behaviors, such as lobbying the government to prevent building new housing stock for the purpose of increasing the value of your dwelling and the amount of your rents. But the act of investing itself? Not rent-seeking. Not considered bad by most economists.

Re: Current Inflation Has Different Effects on Different Age Groups

#93

Post by skybrian » Sat, Jun 09, 2018, 3:39 AM UTC

You could slice up inflation in all sorts of ways: by city, state, homeowner versus renter, how long ago the home owner bought their house, singles versus families, where they want to college (if anywhere), and so on.

Remember that inflation is supposed to measure the prices paid by the average person, but most people make some purchases that aren't average.

Re: Current Inflation Has Different Effects on Different Age Groups

#94

Post by asfasgasg » Sat, Jun 09, 2018, 3:40 AM UTC

ttul wrote: post #14

dylrich wrote: post #5

Earlier quoted context omitted.

You make ~$90,000 a year and are barely getting by with no debt or children? Where do you live?

In the Bay Area, $90K is not sufficient. A one bedroom might cost $3500/month - that’s $40K of your net income.

No matter where you work in the Bay, there are decent 1br apartments within a fifteen minute bike ride that cost less than $2500 a month.

Re: Current Inflation Has Different Effects on Different Age Groups

#95

Post by skybrian » Sat, Jun 09, 2018, 3:46 AM UTC

repiret wrote: post #89

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 CP…

It looks like there's a principled way to compute it:

"Variance is a measure of the uncertainty caused by the use of a sample of retail prices, instead of the complete universe of retail prices. Each month the U.S. Bureau of Labor Statistics collects prices from a sample of approximately 77,400 commodities and services (C&S) quotes in approximately 21,500 outlets around the United States for the Consumer Price Index (CPI). In addition, we collect approximately 5,100 housing quotes each month."

[...]

"Margins of error are usually expressed as a statistic’s point estimate plus or minus two standard errors, so the margin of error on this CPI’s 1-month change is approximately 0.15 percent plus or minus 0.06 percent."

https://www.bls.gov/cpi/tables/variance-estimates/home.htm

Re: Current Inflation Has Different Effects on Different Age Groups

#96

Post by AnthonyMouse » Sat, Jun 09, 2018, 3:54 AM UTC

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…

> This strikes me as lazy data science and full of overreaching conclusions, because nowhere is uncertainty/spread/variance discussed.

It's not just that, the premise itself is nonsense. Inflation measures the value of money. We measure inflation using the price of stuff because measuring it in nominal dollars is obviously self-canceling.

The relative difference in the price of stuff has nothing to do with inflation. Housing costs are high because of supply not increasing to match demand. If restricted housing supply increases prices by 5%, while supply and demand for clothing is unchanged but there is 5% inflation, then housing prices increase by ~10% while clothing prices increase by 5%. If there was 0% inflation then housing prices increase by 5% and clothing prices stay the same. The fact that housing prices increase by 5% relative to clothing prices has nothing to do with inflation at all. What would help millennials isn't less inflation, it's more housing.

If anything inflation helps them, because they hold significantly more debt (in the form of student loans and mortgages) than older generations, and inflation allows the debt to be paid with cheaper money. It also increases the nominal but not real price of housing, which allows implementation of policies that cause real housing prices to decrease without putting existing homeowners underwater.

Re: Current Inflation Has Different Effects on Different Age Groups

#97

Post by mhuffman » Sat, Jun 09, 2018, 5:25 AM UTC

throwaway2048 wrote: post #86

majormajor wrote: post #32

Earlier quoted context omitted.

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.

I call bullshit!

More than 50% of companies have positions that could telecommute and 24%+ of people telecommute fully or partly now.[2]

People do want to live in large cities because of all the cool shit there to do, and that convenience costs money.

You can afford a two-bedroom house in the south-eastern part of the US on $15/hour, which wouldn't even cover the costs of being homeless in SF or NYC.

I understand people want convenience and people want to be close to friends and family, but many of them (not all) could easily solve this problem by simply moving. People seem to think they are "owed" affordable housing regardless of where that housing is -- which is absurd!

[1] https://www.forbes.com/sites/karstenstrauss/2017/06/22/the-g... [2] https://www.bls.gov/opub/ted/2016/24-percent-of-employed-peo...

Re: Current Inflation Has Different Effects on Different Age Groups

#98

Post by DoreenMichele » Sat, Jun 09, 2018, 5:30 AM UTC

mhuffman wrote: post #97

throwaway2048 wrote: post #86

Earlier quoted context omitted.

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

I call bullshit! More than 50% of companies have positions that could telecommute and 24%+ of people telecommute fully or partly now.[2] People do want to live in large cities because of all the cool shit there to do, and that convenience costs money. You can afford a two-bedroom house in the south-eastern part of the US on $15/hour, which wouldn't even cover the costs of being homeless in SF or NYC. I understand peo…

So, in order for that 24 percent to be free to move where they please, that needs to be a figure where they can telecommute full time or where going to the office occasionally from farther away costs less than the amount saved by moving farther away. On top of that, all other household members would need to be equally portable, such as a working spouse or children attending school.

I got myself off the street in part by developing portable earned income and moving someplace cheap. It is something I am willing to recommend as a method. But my entire household was free to move. That isn't always the case.

Re: Current Inflation Has Different Effects on Different Age Groups

#99

Post by uiri » Sat, Jun 09, 2018, 6:00 AM UTC

asfasgasg wrote: post #92

araes wrote: post #64

The claim of a difference is 'slightly' exaggerated (~1%) However, the overall inflation data is quite interesting. - Best tracker of inflation - drinking - Most inflated - Learning and having a roof over your head - Least inflated - Changing location and playing dress-up (you or your home) As always, rent seeking behavior is an issue (or a good investment area). Getting smarter is getting more difficult (or at least…

> rent seeking behavior So many people are confused about the meaning of this term lately, to the point where I think we might need to scrap it and come up with a new one. In traditional economics, rent-seeking is a bad thing, because it involves lobbying the government to increase one's revenues without performing any economically beneficial function. This is why the term has a negative connotation. Almost all econo…

"Rent" in the colloquial sense of payments pursuant to a residential lease is a different meaning from "rent" in the economics sense of the word. The use of this word falls into the trap of many words with differing colloquial and technical meanings. I don't see how abandoning a word's technical definition because of a competing colloquial definition helps anyone.

Re: Current Inflation Has Different Effects on Different Age Groups

#100

Post by fanzhang » Sat, Jun 09, 2018, 6:50 AM UTC

uiri wrote: post #99

asfasgasg wrote: post #92

Earlier quoted context omitted.

> rent seeking behavior So many people are confused about the meaning of this term lately, to the point where I think we might need to scrap it and come up with a new one. In traditional economics, rent-seeking is a bad thing, because it involves lobbying the government to increase one's revenues without performing any economically beneficial function. This is why the term has a negative connotation. Almost all econo…

"Rent" in the colloquial sense of payments pursuant to a residential lease is a different meaning from "rent" in the economics sense of the word. The use of this word falls into the trap of many words with differing colloquial and technical meanings. I don't see how abandoning a word's technical definition because of a competing colloquial definition helps anyone.

The problem is that rent seeking, in the colloquial sense, is an attempt to paint a normal activity, like getting paid rent for housing, with the same brush as bribery type behavior.

It's very similar to say, how Trump co-opted fake news to just mean any news he disagreed with. Original creators of the term fake news are rightfully mad because technically it should refer to news that is clearly factually untrue, like pizzagate.