Ep. 121: Real-Feel Inflation: Why Inflation FEELS Higher Than It Is

A rogue's gallery of inflation hucksters have made lots of money over the years by preying on the sense that the average consumer/investor has that "my inflation is higher than the CPI," with some spin usually on how the gov'mint is intentionally understating inflation for some nefarious reason. These hucksters take advantage of the fact that, for reasons that are so native to the economic system that Daniel Kahneman won a Nobel Prize for describing them, consumers perceptions are not just biased, but biased in systematic ways - which, in the case of inflation, always tends to increase the perceived level of inflation.

In this episode of Cents and Sensibility, the Inflation Guy explains how these biases operate on our sense of inflation. If you too want to sound erudite at your next cocktail party - "Actually, Muffy, inflation just seems like it's 10% because..." - then this is a must-listen episode. If not, then you're also probably invited to more cocktail parties than the Inflation Guy is.

 

NOTES

Ashton, Michael, “Real-Feel” Inflation: Quantitative Estimation of Inflation Perceptions, Business Economics, Volume 47, pages 14–26, (2012)  (https://link.springer.com/article/10.1057/be.2011.35 )

Blog callback: Eighth Grade Math vs Shadowstats (https://inflationguy.blog/2021/05/25/eighth-grade-math-vs-shadowstats/ )

Podcast callback: Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index?     (https://inflationguy.podbean.com/e/ep-72-chapwood-index-vs-cpi-%e2%80%93-which-is-the-better-inflation-index/ )

Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2024)” (https://inflationguy.blog/2024/09/11/inflation-guys-cpi-summary-august-2024/ )

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