Rational expectations doesn't require smart people, Scott Sumner | EconLog | Library of Economics and Liberty:
The public defines inflation differently than the BLS. The BLS adjusts for quality improvements whereas the public does not. The public is interested in "how much more money you need to live the way we live today." In the 1950s that was a black and white TV, in the 1980s a color TV, in the 2010 a flat panel HDTV. Thus the public sees TV prices falling less rapidly than the BLS does.
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