Repeat After Me: Always Adjust for Inflation. Always Adjust for Inflation.


Over at Wonkblog, Lydia DePillis shows us the chart on the right, which comes from a recent study of the effect of corporate mergers on the price of beer, and says this:

This looks like a scary graph of beer price increases. The researchers determined, though, that the rise is largely not attributable to consolidation in the industry; there may be other factors at play.

Urk! What this really shows is the result of inflation. I’ve overlaid in red the CPI for food and beverages since 2007, and beer prices match it exactly. The economists who wrote the study may have used nominal prices in their chart instead of real prices because that’s what they needed as input for their statistical manipulations, but this is a classic case of why you have to watch out for this kind of thing. What the researchers say they found is that the merger of Miller and Coors produced a 2 percent increase in prices that was offset by a 2 percent decrease in transportation costs, but that has nothing to do with the increase you see in the chart. That’s all inflation.

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And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

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