The Economist no longer buys the anti-European hype | 69 comments (69 topical, 0 editorial, 0 hidden)

Re: The Economist no longer buys the anti-European (none / 1)

So where does "widespread belief" and "popular perception" come from? The Economist and assorted economics writers with an axe to grind.

Regarding US GDP growth, as soon as you realise that they have been using hedonic pricing and others have not, GDP goes out the window as a meaningful indicator.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Sat Dec 2nd, 2006 at 09:01:06 AM EST

Yep and yep (4.00 / 2)

Their are the main purveyors of the bullshit, despite debunking it regularly in their own (less read or less influential) columns.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Dec 2nd, 2006 at 09:25:56 AM EST
[ Parent ]

Re: The Economist no longer buys the anti-European (none / 1)

Hmm.
I'm still confused about "hedonic Pricing".
Can you explain it some more, and how it affects the comparison of US vs. EU GDPs?
Thanks.

by ButchAndFluffy on Sun Dec 3rd, 2006 at 12:42:47 AM EST
[ Parent ]

Re: The Economist no longer buys the anti-European (none / 0)

A hedonic price index for a specific good is based on the price of the good's various characteristics. For example, hedonic price indices are often applied to computers. The price of a computer can be explained as the price of its processor speed, memory, hard drive capacity, and so on. Hedonic price indices can vary over time as the prices of the underlying characteristics change.

This is the example from your wikipedia reference. Who are the "others" that are not adjusting for these technology improvements? And if they are not using this approach, how are they handling this issue?

Just to take an example, let's say the UK produced one computer in 1975, and sold that computer for 1 million pounds in nominal currency, and say that is 2 million pounds in real terms, when reflected in today's currency. Today, 2006, they produce that computer and sell it for 2 thousand pounds. Surely you are not saying that the UK GDP component for computer (remember only one made and sold in each of those years) means that in real terms the GDP has dropped from 2 million pounds in 1975 to 2 thousand pounds in 2006. Is that what you are saying? If not, please explain how "other" countries are addressing this issue.

by wchurchill on Sun Dec 3rd, 2006 at 02:45:27 AM EST
[ Parent ]

Re: The Economist no longer buys the anti-European (4.00 / 2)

Here is a good, short, and relatively non-technical discussion of the issue of hedonics and how it'd affect GDP growth.

by Sargon on Sun Dec 3rd, 2006 at 12:15:26 PM EST
[ Parent ]

Re: The Economist no longer buys the anti-European (none / 0)

Thanks, this is really an excellent article. If you had the time, I think it would be very helpful if you could write a short diary on this subject. I think it is poorly understood here at ET. And it is often presented on this sight as having political motivations behind it, rather than being constructed to have better economic data upon which to based better economic decisions. thanks again.

by wchurchill on Mon Dec 4th, 2006 at 04:05:11 PM EST
[ Parent ]

Hedonic pricing (none / 1)

If you think we don't understand the concept, maybe it behooves you to put up the diary!

Note one thing though: it is a different thing to say that (i) hedonic pricing should not be used and that (ii) using it one way in one country and another in another country distorts comparisons.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Dec 5th, 2006 at 06:43:19 PM EST
[ Parent ]

Re: Hedonic pricing (none / 0)

To the first point, I frankly think Sargon would do a better job than I would.

To the second, did you know that countries other than the US were using these tools? Why was only the US being bashed, by you and others? It seemed pretty clear from your and Migeru's comments that you were saying hedonic pricing should not be used--and all the vitriol was aimed at the US,,,,saying that it was being done by the Americans to make their numbers look better. What was that all about?

by wchurchill on Thu Dec 7th, 2006 at 12:00:11 AM EST
[ Parent ]

Re: Hedonic pricing (none / 0)

the "bashing is here and here in this thread. and has been a common theme for months. Just to anticipate the question.

by wchurchill on Thu Dec 7th, 2006 at 12:09:46 AM EST
[ Parent ]

The Economist no longer buys the anti-European hype | 69 comments (69 topical, 0 editorial, 0 hidden)

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