When you hear the name 'Crandall,' it might not immediately ring a bell in the way a famous historical figure or a well-known landmark would. But in certain academic circles, particularly those focused on economics and the intricate dance of prices and quality, the name Crandall is tied to a significant body of work. Specifically, it points to the research and contributions of Robert J. Gordon, an economist whose work, particularly concerning the measurement of durable goods prices, has been quite influential.
Gordon's research, as seen in excerpts from his work published by the National Bureau of Economic Research, delves deep into how we track the value of things that last, like automobiles. He grappled with the complexities of creating accurate price indexes, especially for items where quality changes dramatically over time. Think about cars: they aren't just getting more expensive; they're also becoming safer, more fuel-efficient, and packed with new technology. Measuring the 'true' price change, separating inflation from improvements in quality, is a monumental task.
Gordon's chapter, 'New and Used Automobiles,' highlights a fascinating puzzle that emerged particularly after 1971. He noted a growing divergence between the Consumer Price Index (CPI) for new cars and what a 'hedonic' price index (a method that tries to account for quality changes) suggested. This discrepancy raised important questions: were the official indexes underestimating inflation, or were the hedonic models overestimating it? And how much of this difference was due to crucial quality upgrades, like safety and pollution equipment, that affected all models simultaneously – something the standard hedonic method struggled to capture?
He also pointed out a rather peculiar situation with new versus used car prices in the CPI after 1970. The numbers suggested that used cars were becoming disproportionately more expensive than new ones, a trend that seemed counterintuitive to the reality of the auto market. This led Gordon to investigate further, aiming to reconcile these divergent price movements and ensure the accuracy of economic measurements that underpin broader economic indicators.
So, while 'Crandall' might not be a place you can pinpoint on a map, it represents a significant intellectual endeavor in understanding how we measure economic value, particularly in the ever-evolving world of durable goods like automobiles. It's a reminder that behind the statistics and economic models are real-world products and the ongoing effort to accurately reflect their changing worth.
