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Comments on: Real income, poverty, and a tiered CPI http://www.tvhe.co.nz/2008/11/30/real-income-poverty-and-a-tiered-cpi/ The Visible Hand in Economics Mon, 01 Dec 2008 20:15:27 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2008/11/30/real-income-poverty-and-a-tiered-cpi/#comment-3788 Mon, 01 Dec 2008 20:15:27 +0000 http://tvhe.wordpress.com/?p=2174#comment-3788 “Isnt it the goal of those in the lower tier to be consuming similar to those on the higher tier?”

Huh?

I agree with the implicit argument that looking at income is not the same as looking at lifetime purchasing power – as income changes, the composition of goods consumed change, and wealth changes.

However, as an indicative measure, working out real incomes per tier is still more useful than what we have.

Remember, even if people wanted to consume the same bundles as other people, the income they actually earn is a constraint – by looking at what people in different income brakcets by we can get some indication of the substitution that occurs as we move between income brackets (especially if credit constraints and income uncertainty are big issues for households).

]]> By: Kimble http://www.tvhe.co.nz/2008/11/30/real-income-poverty-and-a-tiered-cpi/#comment-3787 Mon, 01 Dec 2008 04:24:39 +0000 http://tvhe.wordpress.com/?p=2174#comment-3787 Isnt it the goal of those in the lower tier to be consuming similar to those on the higher tier?

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/11/30/real-income-poverty-and-a-tiered-cpi/#comment-3786 Mon, 01 Dec 2008 00:00:03 +0000 http://tvhe.wordpress.com/?p=2174#comment-3786 “I doubt you would get different inflation tracks.”

Really – but with the relative price of appliances falling, and with the relative price of fuel and food rising, I am sure that different income brackets are facing different “inflation rates”.

]]> By: Phil http://www.tvhe.co.nz/2008/11/30/real-income-poverty-and-a-tiered-cpi/#comment-3785 Sun, 30 Nov 2008 23:55:11 +0000 http://tvhe.wordpress.com/?p=2174#comment-3785 I doubt you would get different inflation tracks.

There used to be a ‘senior citizen price index’ as a subset of the CPI, but it was canned when it showed virtually no difference from the headline measure.

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