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Opening Arguments

Attention, shoppers!

Megan McCardle on men and women and "noticing inflation":

Inflation perceptions are systematically biased upwards; everyone thinks that inflation is higher than the CPI is higher than it is.  Presumably that's because we're primed to notice price increases, but less sensitive to price decreases; the decreases are a nice surprise, but the increases trigger something akin to indignation.  I'd also point out that what deflation we've had tends to be in big-ticket items, like televisions, that people don't buy that often.  You're more likely to notice the cost of gas, which you buy once a week.  

More interesting is that these results are biased by gender.  Both men and women overestimate inflation, but women tend to overestimate it much more.  Tyler Cowen wonders why that would be.   

Is it possible that a high perception of inflation is largely the result of a relatively low real income, perhaps mixed in with a slight unwillingness to blame oneself for imperfect labor market prospects?  Does this help explain why tight money and stagnant median income have come together?

I have a hypothesis, though I'm afraid no way to prove it:  women are the ones who do the grocery shopping.

Seems like a sound theory to me. Grocery shopping is the opposite of the big-ticket items we seldom buy, like cars and TVs; groceries are the little things we need day in and day out, week after week, and that makes us more sensitive to the prive fluctuations, mostly upward. I do all my own grocery shopping these days, and even when I was married I did most of it. I liked to hit the supermarket aisles, but my wife didn't care much for it. (And my sister absolutely loathes grocery shopping. She's now discovered Peapod and has most of her stuff delivered to the door; how did I end up with the grocery shopping gene while so many women I know are without it?)

Anyone who does a lot of grocery shopping, by the way, knows that the idea there is no inflation today is a big crock. I don't claim to have noticed the price differences of specific items, but I generally buy the same things every trip, and I sure do notice the increases in the total bill.