December 19, 2005
Hedonic pricing and lousy customer service
Posted by
Mark Kleiman
Remember when the Boskin Commission magically made inflation go down and productivity and real economic growth go up by doing hedonic price adjustments? The principle is straightforward: if I get a better machine this year for the same money, that's like a price cut. But I had my doubts about some of the details.
In particular, what's the hedonic adjustment for rotten customer service? More generally, sellers have offloaded lots of cost and work onto consumers by replacing customer service with voicemail jail and incomprehensible websites. That ought to call for a hedonic price adjustment the other way, but I somehow doubt those adjustments are being made.
