If a t-shirt's quality declines, then it's actually getting more expensive, and that should be tracked.
If computers get better, then that should equally be tracked, otherwise you're introducing an asymmetry, where products get better -> price index doesn't change, but products get worse -> price index increases.
In fact, computers have rapidly gotten both better and cheaper over the last decades. A new 486DX2/66 machine ran around $2500 in 1992 -- now a basic desktop shouldn't run you more than $300-400.
First off, "The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed." Lowering quality is one of the standard ways of dealing with rising production costs so this really does present a large bias.
> gotten both better and cheaper
last decades sure. Last five years somewhat. Next five years ehh, possibly.
http://www.bls.gov/cpi/cpihqaqanda.htm#Question_1
If a t-shirt's quality declines, then it's actually getting more expensive, and that should be tracked.
If computers get better, then that should equally be tracked, otherwise you're introducing an asymmetry, where products get better -> price index doesn't change, but products get worse -> price index increases.
In fact, computers have rapidly gotten both better and cheaper over the last decades. A new 486DX2/66 machine ran around $2500 in 1992 -- now a basic desktop shouldn't run you more than $300-400.