Statistical Power

So there is a reason the statisticians are the most powerful people in the world :)   Today 55 million Social Security recipients are receiving news about their "promotions" and pay increases effective in January 2012.  The CPI-W has increased 4.4% this year (Sept 2010 to Sept 2011) and 3.8% seasonally adjusted.

Who knows (and constructs) the details of the CPI-W?  THE STATISTICIANS!!!

Yes - the "real money" pay increase is determined by 28,000 weekly diaries (in 2007 and 2008) of 7000 families, and 60,000 quarterly diaries from an additional 7000 families which determine the weight of 200 item categories across eight major expenditure groups.  Statisticians collect prices monthly for 80,000 items that are "normalized" for quality and quantity by commodity specialists to compute the price for each of 200 items.  And is all this mathematically and statistically accurate?  I guess you have to trust statisticians like me :)

But we all know this meaningless index (based on the 1999 changed geometric mean) - which has been argued about within the statistical community continuously - is not your personal inflation.  Finding your personal inflation is as easy as looking at your monthly bills and comparing to last year.  Yet, 55 million people are pooled together into a "one size fits all" group and given a number.  (By the way - the 'W' stands for urban wage earners - you tell me why the politicians legislated that retires inflation index would be based on urban wage earners consumption patterns!)

And what exactly is the seasonally adjusted stuff?  Again just gulp and trust that the statisticians know what they are doing (even though it is 0.6% reduction). 

In the end, 55 million people will just accept the number because it was too hard to understand (and pass) that statistics course in school. 

Statisticians rule.