Wednesday, May 28, 2008

More on adjusting for quality when calculating inflation

In an earlier post on inflation (remember, inflation is supposed to capture only price changes, not quality changes), I put forward the notion that the official statistics from the ONS may actually understate inflation in certain products when they incorporate quality adjustments in their calculations.

I've done a little more digging and here are a few notes on quality adjustments in the consumer price index (CPI):

An ONS paper by Adrian Ball and Andrew Allen provides a good overview of quality adjustments made to measured inflation. The authors note that until January 2003 quality adjustments were made using a the 'option cost' method:

'In option costing the retail cost associated with a change in specification is obtained from the cost of purchasing the change separately or as an added option. Fifty per cent of this is added to the price of the original model to give a price comparison that is independent of any changes in quality.

Fifty per cent of the cost is applied for a number of reasons. In part this is because 100 per cent option cost could lead to an over adjustment for quality change, due to the fact that the cost of buying features separately is generally greater than buying them as a package.'
This method of capturing and accounting for quality improvements in products in measured inflation seems overly crude, in my opinion. Fortunately, from February 2003, the CPI started using a 'hedonic' approach for certain technology products. The word 'hedonic' relates to the concept of derived pleasure of the individual and the 'hedonic regression method' is generally used for high technology products where upgrades are frequent, as it accounts for changes in measurable characteristics of products such as computer memory and processor speeds, digital camera photo resolutions etc. For technical details on how this quality adjustment is calculated see here (a nice, short note on hedonics) and pages 47-49 of the CPI Technical Manual .

Both documents provide similar examples where the hedonic calculation is applied to a computer whose price was measured in January but has seen a processor upgrade in the following month. In the second example, while the actual price has increased by 32%, after the hedonic calculation the price is shown to fall by 4.4% (that is, after stripping out the change in quality). It's quite the difference.

To conclude, after all this digging, it does indeed look like the ONS may be overdoing it. In my earlier blog post, I gave the example of replacing my laptop five years later. After applying the hedonic adjustment, it would surely show appear that the price of my laptop would have plummeted over five years. My view is 'that it (my laptop) really hasn't fallen that much (in price) at all. Why? Simply because my old laptop is now obsolete. It simply not relevant to compare the new laptop to the old laptop. The philosophical point relates to the question of 'what exactly is a laptop?'. I agree that you do get more for your money in the short-term. However, as time progresses this gain quickly evaporates to zero.' I may be missing a crucial point here (?) but it does seem as if something is amiss and that the official statistics may actually understate inflation rather overstate (as most articles and economics textbooks claim). Indeed, Ball and Allen conclude in their paper that, 'For the HICP, the downward impact on the computer price index was more marked though because the weight associated with PCs in the HICP is small the change still would have had little impact on the overall published index.' I believe this is an important issue that needs to be resolved because the role of technology in our lives is continually expanding to encompass ever more products.

'Seeing is believing when it comes to inflation' - John Kay on 'salient prices'

In a recent article titled 'Seeing is believing when it comes to inflation', John Kay (my favourite British economist, Tim Harford is second), discusses perceptions of rising prices. He summarises the state of inflationary affairs perfectly:

'... perceptions of inflation are formed, not by the ONS, but by the most salient prices. The price of petrol is highly salient: not only do people buy petrol regularly, but even when they are not buying it, they routinely pass signs that display the price. We are most observant of the prices of goods we buy regularly and often and of the cost of undifferentiated products, such as petrol or milk, for which price comparisons are easier and likely to stick in our minds. Utility prices are salient – with the exception of telecoms whose price structure is bewilderingly complex.'
'The ONS survey identifies four categories of expenditure, accounting for 16 per cent of total spending, whose prices have fallen in the past year. Telecoms is one. The other categories are clothing and footwear, furniture and electrical items, and cars. All these products are heterogeneous, none of them are weekly purchases. Most people probably have a vague sense that prices of these sorts of items have not gone up much, but have no overall picture.'
However, Kay concludes with the reminder that perceptions and expectations of inflation lead to actual inflation, so these doom-mongering reports may carry some forward looking value:
'...inflation expectations feed into future prices. The amateur inquiries of the Express and Mail tell us little about the present. But they focus on what is most visible. So they may be a more illuminating guide to the future than the careful analysis of the professional statistician.'

One area where my opinion on inflation likely differs to that of most economists is on the role of technology on inflation. Statisticians have to account for changes in quality when calculating prices - that is, all bread is not equal, £500 buys a lot more computer than it did last year, digital camera are plummeting in price, etc, etc. Generally, technological advancement means that you get a lot more for your money as time progresses. I need to investigate how this is accounted for in more detail, but I think the official numbers may be severely overstating the benefits of technology because they may not properly account for obsolescence. For example, my laptop cost me about £1000 five years ago. If I was to replace it with a laptop costing an equal sum in today's money (accounting for purchasing power), the machine would have much more functionality. It will have tonnes more ram, hard-drive space, a faster processor, better software etc. Because I am supposedly getting more for my money, I imagine the ONS would say the price of laptops has fallen. My somewhat philosophical argument is that it really hasn't fallen that much at all. Why? Simply because my old laptop is now obsolete. It simply not relevant to compare the new laptop to the old laptop. The philosophical point relates to the question of 'what exactly is a laptop?'. I agree that you do get more for your money in the short-term. However, as time progresses this gain quickly evaporates to zero. Food for thought.

Monday, May 26, 2008

Aish, enough already vid all dish technical mumbo jumbo

"Lesh have a little fun dish bank holiday veekend, vhat do you shay?"

Here are some links for the rainy Bank Holiday:

- Robert Muraine Break Dance Video - from the show, 'So You Think You Can Dance?'

- Coke additive is being dropped because it damages your DNA! ... well, it is the Daily Mail, but still.

- Another crazy old dude, this 64 year old is going to jump out of a balloon, 25 miles high. The fall back to to earth will take a full 15 minutes.

- This guy doesn't give business. Check out this link for more photo's of Chinese people wearing their pyjamas in the streets.

- Here we have 50 of the best comedy clips - more for an American audience, so lots of new material.

- FAIL blogs. Nice simple concept. This one is in in my RSS reader. Here's another.

Blogger custom domain plagued by 'Error 404 server not found/webpage cannot be found' messages

Buying my custom domain through Google/Blogger was a cinch. It seemed the perfect solution because I don't much care for the technical side of domain registrations/re-directing web pages etc. I don't see why I should have to. Afterall, when you go to buy a car, you care about usage, not about how the manifold sprocket drives the flux capacitor, or is it the other way around?

Alas, things did not run so smoothly and last night I visited my blog to receive the message:

'The site you have requested could not be found. (404)'

This later turned into 'Server Not Found. Error 404.' in Firefox, and 'The webpage cannot be found. HTTP 404.' in Internet Explorer. Bad times. Bad times indeed.

I switched back to the original blogspot address (via Blogger > Settings) which still worked fine, and set off in search for a solution. I came across a blog by Nitecruzr that addresses a lot of custom domain problems in Blogger, but I was still a bit baffled by all the technical details. From there, I found the Blogger Help Group, where Nitecruzr and others dish out help to the needy. Searching around in this forum, I found this cool quick fix by davidgonzales:
"Then I had an idea, what if I used a different browser to access my account and change the settings to publish with a custom domain? I was using Firefox, so I launched Internet Explorer. I opened my account, went under the Settings tab. Did the necessary changes to the settings to I can publish on my own custom domain (and I entered my custom domain) and VOILA! I have now changed my blog into my own custom domain! Yeehoo!"
I opened up Internet Explorer, and tried this. The first time around, it failed. No yehooo. Then I tried it with the domain name (i.e. no 'www.') and got an error message. Still no yehoo. So, I put the original back in and yes, voila ... yeeehooooo! For some reason it worked fine the second time around.

I've got no idea why this magic tip works, but I'm very grateful that it does! Thanks to all. I just hope it lasts!


Experiencing technical problems with the domain name. Not good. Come on Google!

Sunday, May 25, 2008

Woo hoo! I've got my own domain name, and it's a ''.

The url of this blog should re-direct to the new address ( over the next few days. In the meanwhile, if you are one of my many thousand regular readers, get ready to update your bookmarks/RSS feeds.

Ah, to be on the golf course

Made the most of the only sunny day of this bank holiday weekend with an enjoyable day of golf. Earlier analysis has started to pay off and everyone is improving their game ... apart from me!
My scores of 36, 36 and 37 are exactly in line with my average but at least it's consistent.

There is much to work on this season, especially given our grand plans to attack an 18-hole course this year (the world will never be ready for this).

Thursday, May 22, 2008

Wednesday, May 21, 2008

fat lumps

Just set up my first Tumblog called Fat Lumps, to track our efforts to lose weight.

If you've never heard of a Tumblog before, sit tight, I will explain more in my next post.

Tuesday, May 20, 2008

You know you are slipping when ...

You have to fight your way through ten packs of Dorito's in order to get to the track-suit bottoms at the bottom of your gym bag.

: (

Orange have gremlins - broadband DNS issue follow-up

Looks the fix is working. Since changing to the OpenDNS server address, I haven't disconnected from the internet once.

Further evidence that the problem lies with Orange:
- I tried accessing my Orange mobile account details on-line today, but the Orange web-site was down.
- When I phoned Orange the guy on the other end was saying 'come on, come on' to the system. He also admitted they'd been having problems recently.

Orange broadband (Livebox) connection constantly dropping: the problem and the solution

The problem - A few days ago, gremlins appeared to have invaded my wireless Orange Livebox router, causing my broadband connection to constantly drop. The lights on my Livebox were still on though, and my laptop was detecting the wireless signal at full signal strength, and yet I could only access the internet intermittently. Strangely, some sites such as BBC News loaded up normally, but sites like Facebook and Hotmail were failing every time. I unplugged the Livebox and went back to the old plug-in modem (I call it 'the turtle') and everything worked fine for about half an hour ... after which the connection started dropping again. Bah!

A few hours ago the problem worsened drastically. I needed a fix. I rebooted the system (always the first port of call), unplugged and reconnected the modem, and checked all the cabling to make sure nothing had come loose. The broadband signal was being detected at a full strength but limited information was passing through the pipe. I started calling some old help-line numbers in my Orange literature, but these no longer worked. When I tried to call the help-desk through my mobile, the automated message said I would be charged at national rates and that the queue was very long ... not good. I switched to the land-line, but the message then said I would be charged at mobile rates ... even worse!

I would try and use the internet to find out why my internet connection wasn't working properly. It was a bit of a Catch-22 situation but it worked!

The solution - On (one of the few sites that was still working perfectly), several people were suffering from the same problem. The consensus was that an Orange server had failed, so no traffic was making it through. A user by the name of TheTallOne suggested changing the DNS from the Orange DNS to an Open DNS to solve the problem. Don't ask me about DNS's. You know that feeling when you open the bonnet of a car and think 'what the hell am I looking at?'. That's what I think when people start talking about DNS's and TCP/IP thingy's. Fear not. It's an easy fix. Just follow these instructions and all should be well:

In Windows XP go to Start > Control Panel > Network Connections > Right click on your dial-up icon and go to 'Properties'.

Click on the 'Networking' tab. Highlight 'Internet Protocol TCP/IP' if it isn't highlighted already, and then click on 'Properties'. It should be set to obtain the DNS server address automatically.

Change this to use the following Open DNS addresses (just type them in):

Hit OK, close the connection, give it 30 seconds, and then reconnect under the new settings.

Your net connection should now be firing on all cylinders. You can always try and go back to obtaining a DNS server address automatically in a few days.

Hope this helps.

A few more links to help:
- Orange help pages explain what a DNS is
- Using Open DNS with Vista
- A list of DNS servers and how-to information

Thanks again to TheTallOne!

Monday, May 19, 2008

Old joke: How to make an anti-gravity cat

I missed this joke when it first went around in 1992.

I wonder how many people have tested the theory?

Why I don't go to fringe theatre

Just had to put this clip together:

Saturday, May 17, 2008

Blended face

Face of the Future also lets you blend, or average, different faces together.

This is a composite of two pictures of myself, a picture of a stranger, two pictures of Sylvester Stallone (his features dominate) and a couple of pictures of Arnold Schwarzenegger. Freaky.

Face moprhing with 'Face of the Future'

Upload a picture of your face to 'Face of the Future', and you can instantly transform yourself into a different ethnicity, a piece of portrait art, or a caveman. You can even alter your age to see what you would like as a a baby or an old man/woman. Amazing stuff.

Here are my results using a photo from almost ten years ago:

And here are my results using a current photo:

Here is the complete choice of filters that you can apply:

Age: Baby, Child, Teen-age, Young-Adult, Old adult
Ethnicity: Afro-Caribbean, Caucasian, East Asian, West Asian,
Artwork: Manga, Boticelli, El Greco, Modigliani
Additional: Feminise, Drunk, Ape-man (50% chimp)

Have a go and see what you look like.

Tuesday, May 13, 2008

RMF Golf - We need to improve our short game!

I've put together a collection of photos and clips of our play so everyone can pick apart their game.


And now for some professional advice on how it's done. The 5m video below contains two instructional videos and a couple of clips of iron play from Ben Hogan and Sergio Garcia.


Seve's swing was too fast too capture as photos. Check out this 12 second's beautiful:

RMF Golf Day May 10 2008 - A short film and a couple of pictures

Monday, May 12, 2008

Sunday, May 11, 2008

Why Oh Vaio? Heat, flash graphics, and BIOS problems

I love my Sony VAIO laptop. It's a PCG-FX604 (a name that just roll's off your tongue), with a 20GB hardrive, 512MB ram, and a 1.1Ghz processor. A simple machine, yes, but more that adequate for my needs.

But the beast is suffering from some rather serious problems. It can't handle Flash graphics (produces the blue screen of death, or BSOD). I got around this by installing Ad-blocker and Flash blocker add-ons in Firefox, but in this day and age most web-sites include some Flash based funkiness, and I am missing out. The solution may be to 'flash the BIOS' with an upgrade - but I'm still not 100% sure what this means and am uncomfortable with the process. Still, even though it's a potentially dangerous procedure on these old VAIOs, I'll probably try it in a few weeks.

A new problem is that my machine overheats and turns itself off quite frequently. I fear it will turn itself off for good one day. Is the old horse telling me something? Perhaps. When I put my hand underneath the unit after it's been on for a good few hours, it's burning hot, and the fan unit barely blows. We are talking severely tired lungs. I blew into the fan vent really hard to try and clean out any clogs, but this did nothing other than giving me a face full of dust for my efforts. I have to research this problem further but the first step is probably to take the machine apart and give it a thorough cleaning ... but would I be able to put Humpty Dumpty back together again? I'll try this after I try to fix the BIOS problem (if my pc is still alive). In the meanwhile, a temporary fix I am trying is to change the power settings to 'Minimal Power Management'. This actively manages the CPU speed and CPU voltage so it isn't always running at 100%. Hopefully, this will reduce the heat intensity.

I'm sure I could run this computer for a few years longer if I can fix these problems. If.

Kayaking in Halong Bay, Vietnam (12 pics)

I was very happy to see these photos in my inbox. One of our fellow travellers was brave enough to take a camera on the kayak!

Friday, May 09, 2008

It's all about Goran & Eames with Law & Order : Criminal Intent

My current favourite show comes on Hallmark of all channels. It's called Law & Order : Criminal Intent, and is an somewhat standard detective formula that is superbly executed. If you haven't come across this series before, here is a selection of clips put together by a fan. Watch Detective Goran's mannerisms and acting closely. This guy knows empathy, he knows passion ... he's got issues.

His partner, Detective Eames, doesn't get much of a look-in sometimes, but she is the perfect counter balance to the intense Goran; a tough cookie in her own right, I love her one-liner and facial expressions in response to Goran's eccentricities.

I'll research the actor (Vincent D'Onofrio) in more detail later but let me say the combination of this complex character with such believable acting is quite possibly the best thing I have seen on the screen.

My phones over the years

12 Radio Times magazines for £1

Also received my first copy of the Radio Times magazine this week. The offer is 12 issues for a £1. After this you are on at the regular rate, although you can cancel after the 12th issue.

It's not a bad magazine for sofa browsing, but it's nothing particularly special. However, I did learn that there are two, yes two, JCVD movies on terrestrial television in the week ahead, so I've already got my £1 worth.

Thank you Martin.

Cheap, dodgy hayfever drugs over the internet

Just landed in the post:

120 Zirtec generic tablets for £5.00 (including shipping), and 28 Piriton generics for a further £1.60. I bought these tablets on special offer from Chemist4u. Last year, the cheapest tablets I found were just over £1 for seven (Dr Reddy brand in Boots), so I'm mighty chuffed with this purchase - it works out to a shade over 4p per hay-fever tablet.

I don't recommend buying important drugs over the net, but Martin's Money Saving tips have never let me down so far. Also, hayfever is not exactly a life threatening condition, but it is a son-of-bitch when you develop the symptoms and haven't diagnosed the problem.

If these differ from Zirtec in any way, I'll post an update on this page. Otherwise, assume they are working fine.

Wednesday, May 07, 2008

There comes a time in a man's life ...

... when his mobile phone contract is up for renewal.

My current phone is a Nokia 3120. No camera, no internet, no GPS, no 3G fandango. It's small and hardy, a real work horse. I don't worry if I drop it (I drop it). I don't worry if it gets scratched. The 3120 is a phone that knows it's purpose and it serves it perfectly well. I love it.

Nokia 3120

However, my phone contract - I'm with Orange - expired recently and it was time to look around for a good deal.

I looked at the N95 but the large size put me off. I was enticed by the LG Viewty but it scratches easily and I'm not sure about the long-term reliability of an LG phone. In the end, I decided that the new generation of phones were pretty funky but the extra functionality was just bells and whistles (albeit nice bells and whistles), and the trade-off with stupidly short battery lives just wasn't worth it. A simple phone would be just fine for me. I decided on the Nokia 6300.

The next step was to shop around for the best deal in the market. I found some superb cash back deals, where the phone and monthly fees work out to be free over the life of the contract. Too good to be true? Kind of. I read more about these cash back deals on a few internet forums and decided that it just wasn't worth the hassle. The cash back route works out fine for many people, but I couldn't risk not being rebated and losing hundreds of pounds. Then I realised that I hardly use my phone so the pay-as-you-go option could do away with the contract business altogether. I'm currently getting free broadband with my mobile phone package, but I could pay for this separately and still save money. Yup, time to leave Orange ... after all these years.

I called the disconnections people at Orange and asked for my PAC code, which enables you to port my phone number to another network. I expected to be hit with offers to stay on board and this is exactly what happened. After a brief discussion, I was offered a deal to stay with Orange on an 18 month contract. Here's the deal:

- 400 minutes a month
- 100 texts
- Continued free broadband
- £13 a month (or without broadband for just £8 a month!)

What's more, the first free phone they offered was the Nokia 6300, the phone I had my eyes on all along. I gobbled it up. The 6300 will arrive next Monday, and it will be my first ever phone with a built-in camera! Happy days.

Nokia 6300

I've been rolling with Nokia phones on the Orange network my whole life. Most things change. Some things don't.


I stood on the scales at the gym today and was half a stone lighter....woo hoo!

Alas, as I leaned forward the half stone came right back. A certain phrase comes to mind.

Yet another garden photo

Monday, May 05, 2008

Thursday, May 01, 2008

Top 10 Jackie Chan Stunts

One word: dedication.