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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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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