Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.
The use of the word “hedonic” to describe this technique stems from the word’s Greek origin meaning “of or related to pleasure.” Economists approximate pleasure to the idea of utility – a measure of relative satisfaction from consumption of goods. In price index methodology, hedonic quality adjustment has come to mean the practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes. – BLS
I wish they would hedonically adjust my income. Could be why we suspect the “real” – as in actual purchasing power – real wage is lower than what is being measured.
All this nonsense is starting to come home to roost.
Let us reiterate a thought from our last post, which is apropos to Apple.
The fundamental problem with
the housing marketApple is that [iPhone] prices are too high and need to come down. – GMM
And they will. Tesla gets its.