Inflation Ignorance - Missing The Systemic Decline In Quality, Utility, Durability, And Service

Authored by Charles Hugh Smith via OfTwoMinds blog,

The quality, durability, utility and enjoyment-of-use of our products and services has been plummeting for years.

One of the more mysterious aspects of the official inflation rate is the hedonic quality adjustments that the Bureau of Labor Statistics makes to the components of the Consumer Price Index (CPI).

The basic idea is that when innovations improve the utility (and pleasure derived from) a product, the price is adjusted to reflect this improvement.

So if television screens become larger, while the price per TV remains the same, the hedonic quality adjustment adjusts the price down when calculating the CPI.

In other words, since we're getting more for our money--more quality, more features, more goodies, more pleasure--the price is adjusted down to reflect this. If a TV that cost $250 had a 19-inch screen in the old days, and now a $250 TV has a 27-inch screen, the price of TVs in the CPI is adjusted down to reflect this increase in what the consumer is getting for her $250.

So while a TV still costs $250 to the consumer, in terms of measuring inflation the TV is reckoned to cost (for example) $225, as the consumer is getting a larger screen for her $250.

In other words, the price of TVs declines when measuring for inflation, even if the retail price remains unchanged. This is how the official rate of inflation can be so low even as real-world costs keep rising.

If you read the above link, you'll find the mathematical model used to reduce the price of products when calculating the CPI, i.e. the rate of inflation.

While the BLS website makes mention of the possibility that hedonic quality adjustments occasionally go the other way, i.e. quality has declined, it's clear this almost never happens. "Innovations" are always improvements.

I propose we start tracking anhedonic quality adjustments, i.e. significant declines in quality, durability, utility and the pleasure derived from the product or service. (Anhedonia: inability to experience pleasure from activities usually found enjoyable.)

First up: airline travel. Can any remotely objective passenger claim that airline travel is now more pleasurable than it was in the past, and that the quality of the product and service has increased due to "innovations"?

We all know virtually every aspect of air travel has declined other than the reliability of the aircraft--and due to tight schedules, just-in-time inventorying of spare parts and lack of redundancy (i.e. spare aircraft), even minor maintenance issues now routinely trigger flight delays.

Have typical airline seats become larger and more comfortable? You're joking, right? Seats have been shrinking even as the average girth of the passengers has increased.

First class seats may have become more luxe, but so have the fares.

As for hedonic experiences such as pillows, blankets, meals--welcome to Anhedonia. The industry is shifting to an everything now costs extra model: printing a boarding pass, speaking with a sales rep on the phone, carry-on luggage, etc.--everything carries an additional fee.

Changing a flight reservation can cost more than the initial price of the ticket.

And this is not even considering the entire air travel experience at airports.

Any fair anhedonic quality adjustment to air travel would double the CPI cost of a $300 ticket to $600 to reflect the staggering decline in quality, service and enjoyment.

Let's next consider computers. While the BLS is busy lowering the CPI price of computers due to faster processors, more memory, etc., the degradation of the utility of computers and enjoyment (i.e. ease of use) is ignored.

Consider the "innovation" of Windows 10, Microsoft's replacement of the Windows 7 workhorse operating system. Anyone else getting Win10 error messages demanding that I manually upgrade the BIOS on my laptop in order to get the latest upgrade? No instructions on how to do so are provided by Microsoft, of course.

To the best of my knowledge, Skype and Windows 10 remain incompatible in a variety of subtle and mysterious ways. Microsoft owns Skype, so welcome to Anhedonia. Please don't tell me the sudden failure of Skype on Win10 machines isn't a reality; we've given up even trying.

Then there's the decline in durability, not just in computers but in everything. Brand-new Corporate America appliances are rusting along the bottom within a year, almost-new U.S. branded ovens turn on by themselves, and the repair of the defective sensor costs more than the entire stove/oven itself--I could go on and on, but you have your own stories of devices and appliances failing or corroding in a few short years.

Water heaters once typically lasted 30 to 40 years. Now we're lucky if they last a decade.

The actual utility of "innovations" is also suspect. New cars have rear-view cameras to promote safe reversing, but some of the screens are so small and prone to glare that they're actually worse than having no rear-view screen at all, as drivers slavishly attempt to make use of the glare-ridden screens to the detriment of their driving skills.

And how about that college diploma that now costs $120,000 and up? Has the utility value increased or decreased?? How about the effectiveness of healthcare in terms of improving health and healthy longevity? How about the immense suffering created by addiction to supposedly "safe" and "non-addictive" opioid medications? Did the BLS calculate the CPI cost adjustment of the gargantuan decline in the quality of our national life due to the widespread distribution of addictive opioids?

If we could be honest with ourselves, we would have to conclude that any comprehensive accounting of anhedonic quality adjustments would double or triple the rate of inflation as measured by the Consumer Price Index.

The quality, durability, utility and enjoyment-of-use of our products and services has been plummeting for years. This is a core reason why the official rate of inflation/CPI is a complete joke. Welcome to Anhedonia.

Of related interest:

Earn 25,000 Points To Nowhere (July 24, 2013) (humor)

My 31-Year Old Apple Mac Started Up Fine After 15 Years in a Box (February 28, 2015)

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.


Rapunzal Wed, 10/11/2017 - 08:43 Permalink

All statistics are a lie. The CPI, unemployment, manufacturing, home values and especially commercial RE. I can go on and on. Our media feels like the lying press at the end of the SU, our economy is controlled by the government via PPT and the FED, how obvious can it get. The parasitic elites are working 24/7 to create their emergency exits. The American middle class will hold the bag after largest economic collapse in human history. All organized by the bankers, corrupt politicians, parasitic elites and covered up by our press.

ThirteenthFloor JRobby Wed, 10/11/2017 - 10:10 Permalink

It’s about time we had such an article. Rather than inflation, consider your buying power. Yes, there is a lot of cheap junk out there, but to buy products or services that were the same quality, support and documentation of yesteryear takes some real serious ‘coin’. One can make the case that to live the exact same lifestyle today, that a $45k household had in the 70’s you would need to make $400k.

The same quality food, healthcare, auto, house products ,etc.

Not to mention how much carefully to need to shop or research your purchase.

In reply to by JRobby

Stuck on Zero ThirteenthFloor Wed, 10/11/2017 - 11:00 Permalink

If you own and rent apartments life is hell with the "new quality" of plumbing fixtures. Faucets rot out in 5 years. Toilet tank valves crumble and leak in three years. Copper shutoff valves corrode through and the seals leak in ten years. The Chinese crap you get now is made of some kind of recycled pot metal that looks good on the outside but corrodes to dust in tapwater that has a few minerals.

In reply to by ThirteenthFloor

t0mmyBerg radio man Wed, 10/11/2017 - 09:01 Permalink

These adjustments were made to slow the rate of increase in government spending in entitlements which are indexed for inflation.  The government has a huge incentive to understate inflation and with the hedonic adjustment, which is almost cpmpletely arbitrary they have the perfect tool for command based inflation monitoring.As for Skype and Windows 10, I must say that the computer I run Skype on has become almost unusable.  It runs Windows 10.Then of course fitting the theme here, there is the fact that with Skype you no longer get voicemail features, rendering Skype almost useless for anything but casual use.   Or how about the bug the insist is a feature starting with the file explorer in Windows 7  I think.,  If you click on a folder in the left pane to open it, that folder automagically drops...wait for the BOTTOM of the window, thus cutting off any view of its contents below and forcing the user to click the scroll bar to see what they were looking for in the first place.  Seriously.  You can put the folder at the top of the window so when you open it you can see the subfolders and Windows will "helpfully" put it to the bottom of the window for you.  No fixes, now workarounds except to get a third party program like Classic Shell that takes over from the idiotic Microsoft funncitonality.  There are threads where the Microsoft people have seriously claimed this was an intentional design feature.    I fucking hate Microsoft.  Always have.

In reply to by radio man

Hal n back t0mmyBerg Wed, 10/11/2017 - 09:44 Permalink

now think about Apple and its former innovations and whats happening now-think Itunes 12.7  or whatever the latest update is--small business units are the way to go including government-drop most responsibilites to th elowest level. US defense is n obvious exception.Why even have a govt with its bloated overhead, ineptitude runnign social security, Medicare, medicaid and Obamacare and Prescription drugs.Make it competitive in private business and goo dthings happen even if ceos get rich--what, Congress does not get rich you say?Where has congress been for 50 years while funded debt grew to 20 trillion adn we have no clue what the present value of unfunded obligations really is.While Puerto Rico pays in nearly 4 billion a year for Social Security and medicare, and zero individual and corp income taxes, PR GETS 2 billion in food stamps, 600 million in Medicaid,because there is a cap on Medicaid payments to PR.8 billion a year for Social Security is paid out to those in PR and Medicare payouts to over 750,000 are another 4 billion, but the cost down there is roughly 1/2 of the US avarage.Nice payback for PR-it gets 15 billion back for 4 billion paid in. Plus now billions for FEMA.No wonder why Trump said PR was busting our budget. Mybe not actually busting the budget, but it is rather contributory, as it happens with everything.No accountability, no consequences for those involved.Do your own research on my PR numbers cause they are hard to find. 1/2 the population is on soc sec and medicare. PR has a demographics problem. Nobody talking about any of the above. Nobody. But whent th eMayor of San Juan bitches about the freebies her town is gettign, while tanding in the way of progress, it tells you all you need to know  about the society and system.   

In reply to by t0mmyBerg

ThirteenthFloor t0mmyBerg Wed, 10/11/2017 - 10:26 Permalink

Windows 10 is a tinker toy piece of shit. Anyone who values their time or sanity, best stay away from that crap. The need to restore settings after mandatory auto updates is the computer version of ball and chain slave camp.

Google Chrome is the internet equivilent of walking around town nude with a big red sticker on your bare ass. Use Opera, strong firewall.

Buy an aluminum Mac, load it with Linux, or Mac OS, and run well developed software, dump any software quickly that runs slow or consumes system resources in illogical ways.

In reply to by t0mmyBerg

Bemused Observer t0mmyBerg Wed, 10/11/2017 - 11:50 Permalink

All of this computer shit is designed by half-wits, not just Microsoft. Google Chrome doesn't have a scroll bar on the side. Such a small thing, but so important to many. But Google has no 'fix' for this...I had to download a scroll bar from some random guy on a message board where people go to discuss the many ways Google Chrome sucks. This is ridiculous, that I should have to do that just to get a feature that should be available with the OS.Luckily, it worked, and I didn't end up downloading some kind of virus or something. Why would Google even DO that with such a basic feature?  It would be like a car maker suddenly removing the interior and exterior door handles and forcing you to use another, clumsier method to get in and out. Sure, you can still get in and drive, but what is the point of doing that to the driver? How does this improve the overall driving experience?Answer? It doesn't. These "improvements" are nothing more than experimental 'tweaks' being done simply because they CAN. They are not part of some strategy of improvement, they are the attempts by tech to see what it can do, and just how far it can go.You know what else I love about Chrome? The way it suddenly shuts down when it gets tired. No warning or anything, just randomly bounces you right offline. This is even worse than the Windows version I had before. The one where you had to 'bump' the bottom or sides to get the controls to appear. Thing was, you couldn't 'bump' directly, nothing would happen. You had to kinda slide in from the side and sneak your 'bump' in at just the right angle. And every time your cursor got too close to the 'sensitive zone', the damned controls would keep popping up...sometimes you'd get a spasmodic series of pop-ups while you were trying to do something near the 'hot zone'. It was infuriating. For the love of God, what the hell is wrong with these people?

In reply to by t0mmyBerg

BiggestLoser Wed, 10/11/2017 - 08:53 Permalink

I posted on the Kobe steel story. A consequence of inflation is decline in quality. "When it gets serious, you have to lie." Mises and Rothbard explained it long ago.

Doan FreeShitter Wed, 10/11/2017 - 09:55 Permalink

Agreed, and most also seem to believe that sleeping with every guy they meet won't affect how attractive they are. Gonna have a really strung out and washed out batch of bitter casualties once their dream fully dissolves. Used up, tatted, drugged out, and bitterly communist by age 30 is not a good look. I really do have more pity than hatred towards them, actually heartbreaking to see our girls so jaded and ruined by the neo-pharisaic padadigm. Can only hope that this bullshit produces at least a small batch of women with marxist-immune antibodies, which is the batch I'd like to draw from. Find those ones and bare many children. Unfortunately there won't be enough to go around so all must stay sharp. Can't be outsold by the manbun brigade, really, time to launch a major 'marketing campaign' targetting female nesting instincts and make them cognizant that a self-indulgent death spiral of debauchery and squalor will not lead to families but rather a spinster's sad and lonely fate.

In reply to by FreeShitter

nmewn Wed, 10/11/2017 - 08:47 Permalink

The old maxim of there are damned statistics and then there are damned liars with statistics has never been truer.And on a side note, I'm no technophobe but when you build a society based around goods once purchased needing to be repaired but it's cheaper to just buy a know you are living in Krugmans world  ;-)

Madmartygan nmewn Wed, 10/11/2017 - 11:33 Permalink

Not just that, but the "new and improved, high efficiency" crap doesn't even work! Try drying a load of clothes in one of these HE dryers... prepare for a few hours and then an additional manual timed cycle afterwards to get anything done.Does 2.5 hours in a "high efficiency" dryer use more or less energy than an old school, "burns your hand when you pull the clothes out" dryer that does the job in 30min?

In reply to by nmewn

waspwench Snarkie Wed, 10/11/2017 - 14:58 Permalink

Another way around this dilemma is to buy commercial equipment.   I bought a 48 cu. ft. stainless steel, metal interior refridgerator for $2500;  also bought a stainless steel restaurant range.   You have to lie to get them to sell you this stuff as they don't want to sell it for residential use and doing so voids the warranty, but the stuff is built like a sherman tank and is very basic in design and operation.   Sewing machines. small appliances, dishwashers, etc. are also available.   Stuff made for businesses is generally still decent quality and reliable and simple to fix.

In reply to by Snarkie

gregga777 Wed, 10/11/2017 - 08:50 Permalink

"How about the immense suffering created by addiction to supposedly "safe" and "non-addictive" opioid medications?"

Pharmaceutical CONporations recommend that doctors prescribe 10 times to 100 times the actual opioid dosage required for effective pain relief. They deliberately make addicts to increase the demand for their opioids on the supposedly 'illegal' secondary markets. They want to make sure that first-time patients become thoroughly addicted to their opioid poisons.

gregga777 Wed, 10/11/2017 - 08:54 Permalink

The upcoming release of the DSM V will contain diagnostic codes to classify people as mentally ill that do not believe everything portrayed in the Anglo-Zionist FAKE NEWS Media.

• You don't believe unemployment is 'only' 4.3%? You must be crazy. Off to Bellevue with you!

• You don't believe that inflation is 'only' 1.9%? You must be crazy. Off to Bellevue with you!

This will allow the authorities to institutionalize free thinkers just like they did in the former Soviet Union.

Rainman Wed, 10/11/2017 - 08:55 Permalink

“No matter how paranoid or conspiracy-minded you are, what the government is actually doing is worse than you imagine.”     ~ William Blum

CRM114 Wed, 10/11/2017 - 09:01 Permalink

The only valid metric remaining is personal experience, which is of course immediately dismissed by authority as "anecdotal". To be fair to the stats people, all major retailers and businesses now deliberately make changes that won't show up in the stats. Reducing the quality of components and keeping the same model number, reducing packet size but maintaining price, claiming 30 hours a week is full time, etc. To be brutal with the stats peole, they know this is happening and refuse point blank to investigate or adjust the stats.F#ck 'em.I hunt for quality tools, new in the sales, or used. I buy old stuff that's still maintainable (or the few new things that still are), and fix up. Personally I'm glad most people have no clue how anything works. I've got some real bargains that turned out to have an easy, cheap fix if one knows how to troubleshoot.Where do I find the time? I don't work. It doesn't pay me to work. Why spend 2 months in my old job earning $20,000 so I can keep $15,000 after tax to spend on a hot tub and installation, when I can get a broken one for $1,000, troubleshoot, spend $1,500 on materials, and do the work myself in 4 days?

shovelhead CRM114 Wed, 10/11/2017 - 09:39 Permalink

Yup. I love that people dont know how to fix things or can't be bothered. My neighbor gave me a wireless remote 2500Lb. winch that didn't work. I literally fixed the short inside the case in 5 minutes. I almost felt bad keeping it but he already had bought another one.I fabbed up a quick release plate to mount in my pickup bed to haul my bike to places that are too far to ride to for comfort. My old bones like riding on scenic roads, not riding to them.

In reply to by CRM114

radio man Wed, 10/11/2017 - 09:08 Permalink

Fearing there could be a bomb on the plane, Harvey's wife refused to board. To comfort her, they visited a stat professional who said the chances were slim...say, 20 million to one. She wasn't impressed. The statistician took a new approach to calm her fears: Mam, if you take your own bomb with you, the chances there are two bombs aboard rise to 50 billion to one.

itstippy Wed, 10/11/2017 - 09:29 Permalink

I like to refurbish appliances and tools that were made in USA in the 1950s-1970s.  Yesterday I did a Manning Bowman box fan that I bought at a yard sale for $5.  What a beautiful appliance.  It's all metal: steel frame, housing, and grids; aluminum blades.  It's held together with threaded fasteners so it can be disassembled, serviced, and reassembled.  The motor is a separate unit made by GE.  This is what millions of Americans bought for box fans back in the mid 1960s.  They run forever.Today people buy plastic box fans made in China and sold by Wal-Mart.  They're made of heat sealed plastic components that cannot be disassembled, the motor is an integral part of the molded plastic housing, with plastic "bearings".  They're just generally a piece of crap.  After two years you throw them out and get another one.Which appliance gives greater customer satisfaction and value for the money?

Vilfredo Pareto Wed, 10/11/2017 - 09:15 Permalink

I propose we start tracking anhedonic quality adjustments, i.e. significant declines in quality, durability, utility and the pleasure derived from the product or service.  Excellent idea.  Start with how thin those Monster energy drink cans are.   They spontaneously develop holes.  And all that cheap plastic shit that used to be metal and breaks all the time.  And can openers made with such cheap metal they quit working after a few uses.  And don't even get me started on the poor quality of modern razor blades. But hedonic adjustments can only go in one direction. Every change gives us more pleasure for the same price lol

Let it Go Wed, 10/11/2017 - 09:14 Permalink

Over the decades changes have been made in how we figure inflation so as to lower the published number. The cuts in reported inflation were an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible which was to register a vote that would harm the image of Social Security. The article below delves into how current government statistics understate how much our buying power is really dropping.The CPI Understates Inflation Skewing Expectations