Matthew Yglesias says low income people face lower inflation

More specifically, he writes:

At the same time, it’s worth noting that stagnating real working-class wages are calculated by using a meaningless overall average rate of price inflation. Some things—college tuition, apartments in Manhattan, health care—have gotten more expensive much faster than average. This means that people who buy a below-average amount of those things are better off than the statistics show.

So I repeated an exercise I did a few years back--I looked at expenditure shares for different goods for each income quintile, and then looked at price dynamics for each expenditure category in the CPI (the matches between the CES and CPI are not perfect, but they are close.  I am not sure what to do with the expenditure categories "cash contributions" and "pension contributions.").

In any event, I find that the effective CPI for each income category is pretty much the same for 2009-2010: the CPI increase for the lowest quintile was 1.6, for the second lowest was 1.4, for the third 1.7, the fourth 1.8 and the highest 1.7.  These differences look like noise to me.

I will try to figure out something using longer term data, but since expenditure shares change over time, it will be harder to glean meaning from differences in CPIs.

 

What do these two places have in common?

Cudahy, California

New York, NY

What they have in common is that Cudahy's population density, at 21,684 per square mile, is not dissimilar to New York's 26,402 per square mile.  I can't be positive, but I am pretty sure no building in Cudahy is more than three floors tall.  New York is the 5th densest municipality in the US, while Cudahy's is 10th.  If one visits Cudahy, one won't feel particularly crowded either.  But there is no wasted space.

3quarksdaily: Learning Urdu

3quarksdaily: Learning Urdu

Professor Judith Green reminds me of the meaning of "begging the question"

Fowler defines "begging the question" as the "fallacy of
founding a conclusion on a basis that as much needs to be proved as
the conclusion itself."

I learned this in high school, and just forgot (or just got sloppy). It is a good phrase with a specific meaning--we should keep it.

Paul Krugman essentially invites the question: should California secede?

In his column this morning, Paul Krugman discusses a recent Times article that shows that the reddest states receive more of their personal income from government programs than blue states. An implication of this is that places such as California would be better off fiscally by seceding from the union (my colleague Lisa Schweitzer shows that California gets less than its fair share of the gasoline tax as well).

So as someone who lives in California (and who plans to remain here until I no longer have any say about where I live), I should support secession, or at minimum, a substantial reduction in federal taxes and spending, which could then be replaced with state taxes and spending. But I care about the elderly and the poor in Oklahoma, so I guess I am stuck; yet the average voter in Oklahoma seems not to care at all about the elderly and poor in California. This leaves us stuck again.

Hannah Green: The problems of engaging in blind warfare - Forum - The Daily Northwestern - Northwestern University

My daughter on drones.

Green: The problems of engaging in blind warfare - Forum - The Daily Northwestern - Northwestern University

Adam Levitin on the San Francisco Audit: Why no investigation?

Adam writes:

Here's a bombshell: the San Francisco City Assessor commissioned a serious audit of foreclosure documentation filed in the past few years. The audit examined 400 foreclosures. It found problems with 85% of them, often multiple problems. What's more, some of the problems are pretty serious as they implicate not only borrowers' rights, but the integrity of mortgage-backed securities and the property title system. 

The San Francisco City Assessor's audit also serves as a benchmark for evaluating the Federal-State servicing settlement. The San Francisco City Assessor managed to accomplish in a few months what the Federal government and state Attorneys General weren't able to do in nearly a year and a half with far greater resources at their disposal: perform a credible investigation of foreclosure documentation with serious implications about the securitization process in general. That's a lot of egg on the face of Shaun Donovan, Eric Holder, Tom Miller, et al. The SF City Assessor report shows that it really wasn't so hard for a motivated party to undertake a serious investigation. And that raises the question of why the largest consumer fraud settlement in history proceeded with virtually no investigation...