>On Fri, 6 Feb 2004, Doug Henwood wrote:
>
>> The BEA still stands by its hedonic
>> technique.
>>
>> Doug
>>
>
>I'm reading Doug's book,
And I love you for it!
> 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?
The do apply it to a few other products, but computers are probably the commodity that "needs" the technique the most. I sympathize with what they're trying to do - clearly this year's $1,000 computer is worth more than last year's, but the question is just how much? I don't think it's just a matter of its physical stats - there has to be some better way to measure "real" output.
I just read that the BEA is investigating the application of hedonics to medical care prices. With all those "quality" improvements, medical care inflation could be a thing of the past.
>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.
My pleasure!
Doug