Tuesday, April 24, 2012

Pan(t)flation (cps)

Ok, it's late and I want to get into women's pants real quick (excuse me). The point being: inflation seems to stop at nothing, not even women's pant sizes. Via Freakonomics, I stumbled upon an Economist article which states that British 1970-size-18 women's pants are labelled as size 14 these days. "Size inflation", they call it. I guess it depends on how you look at it ('amount-of-cloth' vs. 'beauty-ideal'), but to me, this rather looks like deflation: a lower number on the same good. Of course, this makes me a follower of the 'amount-of-cloth' school, then.

Instead of continuing with an application of different kinds of inflation expectations or the NAIRU concept to this 'size x-flation' theory---in the long run, you look the same, no matter if there is a 14 or an 18 printed on your pants' label---I want to draw your attention to another case of this "panflation" (pan means 'everything'):

Grade inflation. According to the article mentioned above, a drastically larger share of students gets the top grade today compared to 50 years ago. One problem stated in the article is that truly good students don't stand out anymore since 'everyone is getting an A nowadays'. But another problem, and I don't want to point fingers, is that not every institution of higher education rewards the same grades. So here's another off-topic application of textbook monetary problems: What should the education-system equivalent of the ECB do if grade-inflation rates diverge?