OK, I read it, you are right… it does address that issue. Thank you! It’s nice to have an answer from the horse’s mouth.
But even Williams admits I am right… (emphasis mine):
I publish two estimates of alternate CPI growth, based on methodologies in place as of 1980 and as of 1990. The alternate estimates are based on adjusting the published CPI-U for cumulative annual differences in CPI as estimated by the BLS for the impact of its various methodological changes since the early 1980s (or 1990s). Some of the 1990s and later estimated changes have not been published by the BLS. I do not recalculate the CPI, only adjust for the reported, aggregate biases, generally using the BLS numbers.
Unfortunately this approach is not of any value imho. Basically it means, to take the example of using home prices vs. OER: his shadow cpi showed the same spread over BLS cpi when home prices (which comprise a huge chunk of CPI) were rising at double digit percentages as it did when home prices were plummeting at double digit percentages.
How is that useful? Taking what he believes to be a 30-year average difference and just adding it to the CPI every month doesn’t provide any insights about what’s happening with inflation.
There’s also the issue that pri_dk raised, that his estimates seem extremely high. We can observe and estimate price inflation from real life. I do agree that BLS cpi understates cost of living increases to a varying extent — but year over year inflation clearly wasn’t 13% at the high in 2008; and it was not +6% at the inflation low in 2009 when we could all see that prices of most things were actually dropping yoy. So I’ve taken two extremes there… a cpi high and a cpi low… and in both cases, his estimates were far higher than what I would reasonably estimate as the real-life cost of living increase.
So while it’s a great idea to try to do this, his implementation is very flawed, imho.
