“I was one of the first to explain why the median is wrong.” – powayseller.
No, not really. There once were two guys named Karl Case and Robert Shiller who studied this problem which was well-known at the time they created their index.
Here is their story…
“The CSIs were originally developed so that economists, financial institutions, rating agencies and others could study with precision the causes and consequences of home price changes on the U.S. economy. Until their development, the most widely used information on home price changes were indices based on the change of an area’s median home prices. Economists were frustrated with this approach, because indices based on median home prices in a particular geographic area can provide misleading indications of price changes as a result of shifts in the sampling of homes that comprise median measures from one month to another. Case and Shiller, building upon research pioneered by economists Martin J. Bailey, Richard F. Muth and Hugh O. Nourse, solved this problem by creating a repeat sales analysis in which only homes that sold at least twice over a period were covered and included in the index, thus creating an “apples to apples” analysis.”
So it turns out that this problem was even before the 1980’s solution developed by Case and Shiller.
In other news the Associated Press has reported that Al Gore did not invent the internet.
Anyway, someone has to have the passion and desire for limelight to point the press towards these issues. Even though I have problems with the quantitative elements of her opinions I commend her for bringing attention to these issues.
