Re: Some Econ Pessimism?

Michael Lorrey (
Thu, 13 Feb 1997 20:31:50 -0500

Crosby_M wrote:
> Alexander Chislenko writes:
> <I feel quite suspicious about all these statistics. They do not take
> into account any new products and structural changes and economic and
> social novelty. [Snip]
> My personal quality of life increased immeasurably in the last
> several
> years, with the development of the Internet, and my understanding of
> it.
> I have yet to see an indicator of progress that would take it into
> account.>
> You are correct, of course, about the statistics measuring "quantity
> of resources spent" rather than "quality of the results". I work at
> producing the Consumer Price Index and the CPI has been much in the
> news lately for allegedly overstating inflation and failing to account
> for many quality improvements.

Do you take Moore's Law into account? Considering the amount of our
lives that now has to do with information and data processing, etc. some
of the key products to put in your basket are basic units like mips,
megs, bits, kilobaud, and dpi. Seeing as computing power has now become
a commodity product (people wonder why apple is going down the drain)
your idex should use simple units like this to measure the resources
being spent. Such units are not just abstract things either but have a
direct impact on the utility of a given product or service. A 64 bit
computer game is much more entertaining than an old 16 bit game, and a
56kbaud modem provides a much more enjoyable experience on the net than
a clunky old 14.4, with quadruple the download rate. I can access much
more information in a given time due to this.
> The problem, of course, is that we measure what it is easiest to
> measure and not necessarily what is it useful to measure.
> The Bureau of Labor Statistics (for which I work, and for which I am
> not speaking in this post) admits that the CPI can only approximate a
> Cost-of-Living Index. And even if we could achieve a true COLI it
> would still not represent what Nina Munk, in Sep 14, 1992 Forbes
> magazine article, called a "convenience-of-living index".

Maybe thats a good thing, next thing you know the gov't will come out
with a convenience of living tax.

> Right now I'm heavily involved in trying to update the samples of
> goods and services that are used to produce the CPI. We're trying to
> bring in such things as online services and cellular phones for the
> first time. However, these things change so fast that it's extremely
> difficult to get a good sample.

Stick with the simple units

> MORE INTERESTING though, is your implied desire for a *personal*
> quality of living index. Someday I'm hoping we get to the point where
> you could subscribe to your own 'personal COLI' where you'd indicate
> your geographic and demographic characteristics and, especially, which
> categories of goods and services are most important for your own
> needs, and the system would construct and weight a cost-of-living
> index tailored specifically for you. Hmmm, maybe when I get tired of
> working for the government I'll see if I can construct such a
> system...
> Mark Crosby

Maybe your bureau could do such research on the cheap much as many
software companies do: they give something away for free to people that
fill out a survey. Maybe a rebate on taxes or something...


Michael Lorrey ------------------------------------------------------------ President Northstar Technologies Agent Inventor of the Lorrey Drive

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