Hoisted from Comments: Dean Baker on Jason Furman on the American Standard of Living

Dean Baker writes:

Brad DeLong's Semi-Daily Journal: Jason Furman on the American Standard of Living: Jason Furman apparently doesn't like the consumer price index as a measure of inflation. That's fine, but I am afraid that his personal accounts of improving living standards due to technology are not enough to get me to throw out the government's data.

There are many anecdotes on the other side that could be told also. People on average spend much more time commuting to work than they did 30 years ago. Two earner couples spend much less time together than one-earner couples. Long-distance phone service is much cheaper, but families are much more likely to be separated by large distances so they have to use long-distance service. (When families have to separate so that people can pursue job opportunities, the gain from increased productivity appears in the National Income accounts, but the loss due to fact that it now requires a plane trip to see the grandparents doesn't.)

The list of other such anecdotal losses is long (e.g. no one worried about AIDS 30 years ago, what's the price tag on that). Apparently Jason Furman doeesn't want to talk about these anecdotes -- that's fine, but this is why economists use data, not personal anecdotes.

I'm mostly on Jason's side of this as far as material well-being is concerned (i.e., putting the sociology of crime and public safety and relative income to one side). But it is not an area that we have nailed down at all: congestion and AIDS and intermediate goods and services that are counted as final goods and services, et cetera.