On Fri, 6 Feb 2004, Doug Henwood wrote:
> The BEA still stands by its hedonic
> technique.
>
> Doug
>
I'm reading Doug's book, and the more I find out about this "hedonic pricing", the more it smells.
1. They don't apply this logic consistently for all technological innovations. Why just computers? 2. The starting point for the calculation of the "adjusted" values is arbitrary (e.g., why not inflate the cost of computers based on comparison to the first electronic computers? Then every $599 Dell computer could count as a multimillion dollar investment!). 3. Like the antiquated definition of a subsistence income in the U.S. as 3x the cost of food (the poverty line), the hedonic pricing backs up the ideology of the ruling class with objective looking numbers (see, the economy's getting better!) when in fact economic conditions are mediocre at best.
True, this hedonic pricing stuff is not very sexy, but the devil (and the ideology)'s in the details. I want to thank Doug for highlighting this.
Miles