
The Curiously Different Inflation Perspectives of Men and Women [pdf] - yummyfajitas
http://www.clevelandfed.org/research/commentary/2001/1101.pdf
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sridharvembu
Look at Table 1 in the study, and another far more interesting thing jumps
out: inflation perception varies enormously according to income. Low income
people report much higher rate of inflation (across gender) than high income
people. At the lowest level of income, people report 9+% inflation, while at
the highest level of income, it is under 5%. In fact, the difference in
inflation expectations based on income swamps the gender difference.

Austrian School economists have anticipated this, and would point out that
this is the natural outcome of our monetary policy. Inflation perception is
higher at the lowest income groups because _inflation is higher for things
they purchase_. Over time, this effect increases inequality, another effect
already observed.

Yet, conventional economic wisdom attributes the rise in inequality not to Fed
policy but to technology change (on the "right"), tax-cuts-for-the-rich (on
the "left") ...

~~~
sethg
Do the actual statistics bear out the theory that inflation is significantly
higher for the things that low-income groups purchase? See, for example, this
graph:

[http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL,CWSR...](http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL,CWSR0000SA0),

~~~
pwg
From an non-scientific back-of-the-envelope thought process, it would seem
that at least the "perception" would be higher.

At lower income levels, a much higher percentage of one's total income is
spent for life's basics (i.e., food and fuel being the big two). Therefore any
increase in food or fuel costs (both of which have risen rather much the last
few years) takes an ever bigger bite out of an already small income pie.
Therefore making low income individuals very sensitive to price changes in
these basics. Potentially leading to a perception of a higher overall
inflation than what is actually happening in the market as as whole.

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redwood
"at this point, all we can say with any confidence is that it does not appear
that women have a higher perception of inflation than men because of the
things they buy, the frequency of their shopping, or their knowledge of
officially reported"

Really? This is ridiculous. Men and women do buy very markedly different
things in general, especially in family life. For example, men
disproportionally buy technological items which contribute significantly to
the stable CPI.

CPI isn't just bread and butter... if it were inflation rates would be higher.
Since the government can point to easier access to quality-of-life-enriching
items like computers, which fall in price for equivalent goods year over year,
it can manipulate the stats and make inflation look very low. This is
appropriate for an "ideal" household that buys exactly that the CPI index
holds.

But on the other and someone who buys disproportionally the items that are
rising faster than the CPI really does feel a higher inflation rate.

It certainly seems conceivable that women tend to buy items that are rising in
price faster than the CPI more than men.

It's also possible that marketing gimmicks disproportionally target women,
with clothing coming to mind for example: perhaps sticker prices rise much
faster than inflation, but post-"SALE" prices don't. This is a gimmick
designed to encourage buying of deep sale prices, that may play better in
clothing than in other industries, and that thus women fall victim to more.
But since the sticker prices rise, they're noticeable.

~~~
yummyfajitas
Because CPI measures a rate, explanations like this only work in the short
run. As computers/etc become cheaper, they become a smaller and smaller
fraction of CPI. In the long run, CPI will be completely dominated by whatever
factor grows the fastest.

The article provides some evidence that this is not a short run phenomenon,
nor a phenomenon limited to the US. A similar gap is present among Swedes in
1977, and persisted in the US from 1987-2000.

~~~
msandford
It's because the CPI is actually gamed. You just have to change the basket of
goods measured fast enough to keep the rate down. Like the substitution of
hamburger for steak that Greenspan did. The website detailing how this "isn't
shady" is laughable. <http://www.bls.gov/cpi/cpiqa.htm>

Check out <http://www.shadowstats.com/>: "One of my early clients was a large
manufacturer of commercial airplanes, who had developed an econometric model
for predicting revenue passenger miles. The level of revenue passenger miles
was their primary sales forecasting tool, and the model was heavily dependent
on the GNP (now GDP) as reported by the Department of Commerce. Suddenly,
their model stopped working, and they asked me if I could fix it. I realized
the GNP numbers were faulty, corrected them for my client (official reporting
was similarly revised a couple of years later) and the model worked again, at
least for a while, until GNP methodological changes eventually made the
underlying data worthless. "

~~~
yummyfajitas
Steak -> burger -> dog food. Then what?

Most of the "tricks" proposed by conspiracy theorists for tweaking CPI only
work once or twice.

~~~
msandford
Right, obviously you can only go so far on the steak to hamburger. But there
are lots of places for abuse. The problem is that the definition for the CPI
keeps changing, and thus, it's meaning over time is less useful.

What this study showed is that perceived inflation is real and doesn't jive
with the numbers that the economists produce. Who is right? A 500 person
sample will be good to predict the sentiment of the US as a whole. Gallup says
that they only need 1,000 people to get +-4% so this is reasonable.

Ask yourself, which is more likely? The entirety of the US population doesn't
understand how prices affect them day-to-day. Or that some economists have
devised a moderately useful but not flawless metric?

Price formation comes from the relative values that every human being places
on the marginal unit of a good. Prices are an emergent property of people
interacting chaotically in a marketplace. To suggest that literally EVERYONE's
ability to sense the change in price over time you also need to throw out the
very people that set the prices to begin with.

EDIT: Link to gallup [http://www.gallup.com/poll/101872/how-does-gallup-
polling-wo...](http://www.gallup.com/poll/101872/how-does-gallup-polling-
work.aspx)

~~~
yummyfajitas
Given that the US population can't even agree with itself, it's likely that
the US population does not, in fact, understand how prices affect them day to
day.

Or, more precisely, the US population does not accurately remember prices from
years ago. I definitely couldn't tell you how much milk cost in 2005.

~~~
msandford
Right but these people are getting polled regularly, not every five years. So
they don't have to remember how much milk has gone up since 2005, but rather
how much milk has gone up in the last 3-6mo. It's not easy but it's not
impossible.

------
wtvanhest
The authors clearly state they used statistics to adjust for all the basic
factors like what they buy (using single people instead of married couples)
etc. so after you read the 3 pages there are not a lot of options left.

I do have an idea that they didn’t test however:

The women I have dated in the past seem to have selective memory about what
they purchase. They seem to shop and talk about shopping like people who
gamble. They will tell their friends all about the item they saved $50 on 8
months ago but rarely talk about the items they overpaid for. (gamblers like
to talk about wins, but not losses) I can't speak to the shopping habits of
most men, but I go to a store and quickly get what I need for a reasonable,
but sometimes high price and exit as quickly as possible. I rarely remember
what I paid for particular items I got on sale, but know that a shirt should
cost about $50. Etc.

Is it possible that the sample of the women I have dated are similar to a
statistically significant number of women who have selective memory about past
purchases? I obviously don’t know the answer, but if it is true, I think that
is a reasonable thing to test and is backed by the fact that women perceived
clothing as a significant driver of the inflation above the men (page 3).

[Note] Some of what may be driving this is cultural like women not wanting the
guys they are with to think they are wasting money and the desire to talk
about the deal they got like shopping is a skill with their friends. This may
be US/Swedish style cultures.

Researchers could test this by surveying other cultures which are less similar
to US culture which couldn't prove this theory, but could disprove it.

------
svachalek
It's interesting that they took this angle on the reporting, since the study
also shows that men and women disagree much more with the CPI than they do
with each other. Maybe that's common knowledge already?

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sethg
If you asked me which major party was more likely to preside over a period of
high inflation, I would say “Democrats” (even though I vote for them). Yet
according to this commentary, the demographic groups that perceive and expect
the highest inflation are women, singles, nonwhites, and lower-income
groups—all of whom tend to vote for Democrats!

Perhaps people who are more likely to feel that the economy is sucking are
also more likely to take pessimistic views of every economic indicator, even
the ones that, in fact, are not sucking.

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csense
If people tend to disproportionately forget small price changes and remember
large price changes when taking surveys, it could skew the results this way.

Both the distribution of observed price changes, and the probability of
forgetting/remembering, could be different between men and women.

For example, suppose women buy equal amounts of two different goods X and Y.

On even-numbered years, manufacturers raise the price of X by 6% and keep
price steady on Y. On odd-numbered years, manufacturers raise price on Y by 6%
and keep price steady on X.

Actual inflation is 3% but women see a price jump of 6% per year in one of the
products they buy. If they only notice/remember changes in prices and
ignore/forget prices staying the same, then they'll report inflation as 6%.

Men buy equal amounts of X, Y and Z, where Z increases by 2% per year. Thus,
men report an average price increase of (2% + 6%)/2 = 4% per year, again
ignoring the non-inflating good.

All these numbers and effects are totally made-up speculation, but the idea
seems sound and reasonable.

------
JoeAltmaier
People answer survey questions differently. Its cultural. Some want to not
appear dumb, so give conservative and careful responses. Others want to
provide an answer that will provoke further dialog, so may overstate the case.

------
jhales
It would be interesting to see this same question asked for income brackets
and ethnic groups.

~~~
yummyfajitas
If only the authors thought of looking at income brackets. If they did, they
might have included the data on page 2, table 1.

~~~
jhales
lol, thank you for assisting the special needs HN readers like myself :)

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andrewcooke
my immediate reaction was to blame food prices (and gender roles), so i was
surprised to read that food prices in ohio have risen less than other
products. i am pretty sure that's not the case here in chile, and i thought
that it was a global effect (there have been various "scares" related to poor
harvests over the last few years). see, for example,
<http://www.ft.com/intl/indepth/rising-food-prices>

so how come food prices are so stable in ohio?

~~~
sethg
The US Federal government subsidizes agriculture to a certain extent, using
price supports to keep prices above a certain floor, and the US is also a net
exporter of food, so that may be blunting the impact of rising food prices.

