RE: Re: Re: RE: Re: new cpi

["Devine, James" <jdevine@xxxxxxx>]

Eric writes >... Strong evidence exists, I think, that ... "utility" becomes
more demanding over time. This is something that the CPI assumes away but is
something very important for determining subjective experiences of the
standard of living in differ times.

>For instance, if you had the EXACT same set of goods consumed by someone
who lived in, say, 1950 your "real material standard of living" would be
exactly the same as this person in 1950. That is, according to the
assumptions behind the CPI.

>But, in fact, you would likely be very unhappy if you had to consume the
exact same goods someone from 1950 consumed. Imagine that you had to drive
the incredibly unsafe cars driven in 1950? Imagine if you had to use the
same phone as they did. Imagine if you had the sort of TV they had.

>This points out the real flaw of neoclassical price indices. It assumes
people's preferences do not change over time. But over time we become
more  demanding (endogenous impact of capitalist expansion of quality of
goods). THe CPI does not take account of this, however.<

Dean Baker has written about this too. In the Marxian tradition (e.g., Mike
Lebowitz) this is referred to as an increase in needs.
JD