Inflation adjustment is total BS

[zed]

this is something I have thought for many decades, I heard josh (from stuff you should know) say about a year ago, "this dont seem right, and I have thought this for a long time, this inflation calculator is bunk (paraphrasing)"
I have thought this since the 80s reading history of alaska and going well thats fuck all, the yanks paid for that big piece of land, but reading oh thats a long time ago. so you need to adjust for inflation and you get this figure? guess how many quadzillion dollars?

yep fuck all dollars!

lets adjust for inflation a few big things

apollo What cost $25 billion in 1963 would cost $214.74 billion in 2020.

OK its a lot but remember they went back a few times, and thats 1963 dollars.
the space thing was massive, like $214 billion dollars massive, what was biden asked for recently? 2 trillion, so 7x apollo, not to send ppl to the moon but , you know just get over the current crisis

now step back a bit

empire state building, cost $41 million = 1930 = $646 million in 2020

step back even more

titanic, cost $7.5 million = 1912= $204 million in 2020

it cost $7.5 million to build the Titanic and over 15,000 men to work on its construction. Adjusted for inflation, that would cost around $179 million to build today.'

15000 ppl to build something for 200 million today
titanic = 269m long,

So just how much does a superyacht cost? The reports finds that on average, a 100-meter superyacht with a top speed of 25 knots and 50 crew members should cost around $275 million

No I dont want o know a measly 100 meter boat, I want to know how much it costs if my super yacht is 2.5x as long?

and even more

alaska, cost $7.2 million = 1867 = $135 million in 2020!, aye that cant be right, less than the titanic'
(double checked)
"new territory to the United States for the cost of $7.2 million 1867 dollars. In modern terms, the cost was equivalent to $133 million in 2020 dollars"

conclusion
The whole inflation adjusted dollar thing is total bunk!
--FACT--
now what should replace it?
adjust for GDP (even though this number is bunk also) but its closer to reality, something else better?

 

[pcchen]

Personally I think this "inflation adjusted dollar" thing is just to make some numbers, as there's really no such "equivalences" especially when comparing to something built a century ago.
For example, compared to Titanic, modern cruise ships tend to be larger, much more powerful, safer, cheaper to run, and probably more comfortable. No one would want to build a new "Titanic" completely the same as the old ship (as it wouldn't be able to pass any safety regulations ), so it can be difficult to compare their values.
Alaska was also sold quite cheaply. Russia needed the money and the colony was not profitable at the time, and they believed that it's going to be impossible to defend it against the US or Canada, so selling it for some money now is better than losing it a few years later.

For very large projects, or evaluating impacts of huge disasters, percentage of GDP is probably a better estimation. For example, the Apollo program, which ran over the course of ~12 years, cost US$25.4 billion dollars at the time. Nominal GDP of the US, from 1961 ~ 1972, was ~US$600 billion to ~US$1.1 trillion. So the program was something like ~0.3% of the GDP at the time.

 

[Silent_Buddha]

Personally, I think inflation should be adjusted based on domestically grown food products. Too many other things are sourced from cheap labor sources overseas which hides the high cost of labor in the US and true cost to people that live on a low income.

Then compare that to locally grown produce in other countries to come up with relative equivalencies for local currency. Sort of like the "Big Mac Index".

In infuriates me every time a new administration here changes how inflation is calculated in order to hide how high inflation actually is. For example, during the Bush administration the impact of food on the index was reduced to keep the index low. In the Obama administration, the cost of fuel was removed almost entirely to keep the inflation index low.

Basically, it not only hides the true inflation rate in the country but also makes it more difficult to compare to previous years/decades.

It's a pet peeve of mine and really infuriates me when I compare the cost of food (both processed and unprocessed) now compared to 10, 20, 30, 40 years ago. The rate at which the price of food increases is significantly higher than the rate of inflation. But that was counteracted by the cost of luxury goods (TVs, electronics, appliances, etc.) which have held relatively steady due to cheap imports that dodge the increasingly high labor costs here in addition to irresponsible government spending...bleh.

I should stop here before I start to rant about something that doesn't belong outside of the RPSC forum.

Regards,
SB

Regards,
SB

 

[orangpelupa]

These are interesting talk indeed. Yeah the inflation calculator seems too arbitrary. The economy is so ridiculously intricate, interconnected, advanced tho. I have no idea what kind of calculation will reflect better.

 

[Davros]

In the U.K they calculate inflation using something called the RPI Retail Price Index. Basically they have a standard shopping basket pint of milk, loaf of bread, tin of beans ect
and every year they track the price of those items so if the basket cost £5 ten years ago and now it costs £10 the rate of inflation over the past 10 years would be 100%
https://en.wikipedia.org/wiki/Retail_Price_Index
edit: they also use the Consumer Price Index
https://en.wikipedia.org/wiki/Consumer_Price_Index_(United_Kingdom)
"The CPI calculates the average price increase as a percentage for a basket of 700 different goods and services. Around the middle of each month it collects information on prices of these commodities from 120,000 different retailing outlets."

 

[zed]

Yeah davros on the face of it they seem like they would make more sense, but It still doesnt seem right, cause its not taking into consideration what ppl are earning, wages typically go up more than the prices increase (back in the 70s you work a month to afford a TV, today you could buy 5 a week)

this is prolly more useful
https://www.measuringworth.com/calculators/ppoweruk/