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I'm trying to identity a missing variable that could affect poor and middle class consumers more than more wealthy/resourceful individuals.

Assuming that there are decisions regarding cost reductions that also affects product quality, how does "the need to pay more to obtain the same quality/benefit" align with inflation? ... cost of living?

Simple example, in the 1950's all farms sold (implicitly non-GMO) chickens at a given price. Cost minimization introduced decades later affected quality. No matter what drove the new consumer market for non-GMO/grass fed/humane treatment, these additional "features" now come at a premium.

There is probably a well known marketing/business school of thought about this pattern of getting consumers to pay more for what they are already paying for.

  • How can I track cost of living with quality of living. Is there any metric that would help identify what I'm referring to "shadow inflation" that affects product quality? Since it's difficult to get a fiscal correlation over time for this, perhaps the quantity of students enrolled in curriculum X which promotes said business methodology?

...Or the revenue of companies that offer consulting services to enact this change?

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    $\begingroup$ Are you aware that the price indexes used to quantify inflation are already quality-adjusted (to the extent possible, recognizing that many dimensions of “quality” are difficult to capture)? $\endgroup$ – dismalscience Apr 16 at 17:44
  • $\begingroup$ No I wasn't, but that sounds like an area I'd like to understand better. How is that metric obtained and is there ethical oversight? @dismalscience $\endgroup$ – goodguys_activate Apr 16 at 18:39
  • $\begingroup$ This is a BLS document. bls.gov/opub/hom/pdf/cpi-20180214.pdf I have my doubts that they captured the shift away from “organic” farming, but have not verified. $\endgroup$ – Brian Romanchuk Apr 16 at 22:45
  • $\begingroup$ @BrianRomanchuk agreed, it almost certainly doesn’t capture that particular phenomenon, as IIRC the widespread adoption of chemical fertilizer occurred in the 1950s. But as a general measure of product quality wrt observable characteristics it’s probably the best we have to offer. $\endgroup$ – dismalscience Apr 17 at 11:04
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I will respond to a few points.

The first thing is that although I am old enough to be able to complain about declining quality in many products, it is very unclear how widespread it is. Official methodology takes into account quality changes already. However, it appears unlikely that the change of agricultural production is captured, as that is not really observable at the supermarket.

Over a multi-decade span, things like the CPI have inherent flaws with measuring changes. This is known as “the index number problem.” I am not too familiar with this, so I will let the reader ask another question, or do a web search for more information.

At the same time, the belief is that the CPI overstates changes in the cost of living. In the US, this was the subject of the Boskin Commission.

There is probably a well known marketing/business school of thought about this pattern of getting consumers to pay more for what they are already paying for.

If we are talking about agriculture, this is off-base. All the changes made were the result of research in agriculture. One can debate the wisdom of the philosophy (like organic farming proponents do), but changes made were considered “best practice.” (Note that even organic farmers look at agricultural research to raise crop yields.)

How can I track cost of living with quality of living. Is there any metric that would help identify what I'm referring to "shadow inflation" that affects product quality?

If you go to the Bureau of Labor Statistics website (link), I think you will find a statement to the effect that “the CPI is not a cost of living index.” You might get an explanation about that distinction (or ask another question here about the distinction).

At present, the CPI methodology distinguishes between organic/non-organic food. So the inflation rates now are not affected. If you want to compare versus the 1950s, building a new index is going to be nearly impossible, since it seems unlikely that you could find the equivalent of organic prices in the 1970s. All you could do is try to make an adjusted cost-of-living comparison from an earlier period to the present. However, given the large changes in the consumption basket, it is unclear how meaningful that is.

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