This is how CPI is measured - with the substitutes. The desk CPI is the difference between the old hardwood desk and the new MDF desk, not the old hardwood desk and the new hardwood desk.

It's not a terrible philosophy as many people don't care what their desk is made of, and the cheaper materials are actually better in some aspects (MDF doesn't warp as it dries..) but some people do and it's resulted in inflation being massively undercounted, possibly by a factor of 10.

It's less clear cut than that, because modern materials can be better at the job they are designed for. An IKEA kitchen, for instance, might not use traditional wood or stone for its benchtops, but the materials used are actually better in terms of cleaning and handling food on them. It's just that these improvements often get bundled with cheap plastic and parts in other parts of the kitchen to keep costs down.

Similarly, cars today are far superior to old cars in terms of safety, and the gains that have been made on the engine side of things are nothing short of incredible. Every modern car is essentially a supercar by the standards of the 90s in terms of oomph per unit of displacement. The problem is that all of the systems have been coupled together, often needlessly, in order to improve telemetry and capture a bigger share of the used market. It's hostile towards the end user.

There's no question that the level of quality today is higher, especially where it matters. It's just that value extraction eventually turns hostile towards consumers in the absence of real competition and the need for endless growth.

For my household I built my own cartoonishly big 200×80×4cm oak desk. The oak was €350 at the hardware store and only needed finishing. The height adjustable legs add some extra cost, but the whole was maybe €700 tops and a day of work.

You have to look at it from an item by item basis. There are different reasons for each product.

You mentioned household items: This is a combination of two things:

1. Improved QA & reduction of parts thanks to the miracle of Moores law. Ex: a TV used to be a huge collection of boards each doing its own function (power, tuning, picture control, audio). Nows its 1-2 board(power + everything else) with typically one big chip doing everything. Less parts = less chance of failure and each part is QA better thanks to software/industrial automation.

2. These things are benefiting from the low cost of living in places like China. As those countries increase their wealth and alternatives are not found this disparity disappears and you finally pay the real cost of the item but you still benefited from Moores law.

TVs deflated insanely, other appliances less so but it averages out to 0 again thanks to Moores law.

Now look at a desk. The only way it benefits from Moores law is possibly via assembly and techniques used to reduce waste. That probably where IKEA's excellent ability to turn sawdust + glue into furniture comes from. That is real value that is returned back to you in the form of similar raw numerical prices as old wood tables from decades ago.

Machinery can automate the creation of a table made out of what is technically "wood" (sawdust was at one point wood wasn't it?) and computer software allowed designers to create appealing designs and more easily optimize them to target that same number people paid in the 70s(even though it isnt the real number inflation adjusted).

An old table used real wood that probably came from an old growth tree that no longer exists because the value came from decades (or centuries) of "work" done by nature. Exchanging money for that same amount of value that would reveal the diminished value of the currency if you were to get that same thing today. You cant exchange the exact dollar amount and you are not feeling that the modern IKEA take is an improvement/equivalent over the old growth wood.

Essentially the free market could not make a 1-to-1 replica/improved product using something like moores law so that same value costs more today. That difference in quality between the Ikea table and the old wood table is still there its just that most consumers dont see it or dont want to see it since they may not be able to afford the old style of table.

>Airline tickets are a very clear-cut example of this. Tickets are cheaper than they were in the ‘90s (even with inflation) but you get a lot less for that ticket than you did 30 years ago

This is a mixed bag in my opinion:

Airlines have benefited from Moores Law. I watched so many "aviation" youtube channels and my god, the accidents from the early days of aviation are truly nightmare inducing and heartbreaking tragedies. Today thanks to computerization(Moores law), pilots are so much better trained, airplanes are so many orders of magnitude better in terms of safety and fallbacks and fuel is reduced as a result of all of this technology as well. This helped cut costs and also allowed Airlines to provide more classes of service. If you fly first class all in, you get service closer to what you got 30 years ago because you are paying for the same value as 30 years ago.

At the same time, fuel itself comes from a non-renewable resource that included dinosaurs, sea algae, and plants that spent a lifetime doing the work to accumulate energy from the sun and then be stored in a format that can be exploited centuries later. You life's comforts comes from all that work done centuries ago and its not unlimited. Thus as fuel becomes harder to get, the numerical dollar amount goes up and is reflected in tocket costs. Its just that the other reductions didn't make it as evident.

As a side note with the Iran war and the loss of companies like Spirit, more are now being exposed to the fact that todays dollar isn't the same as yesterdays dollar. Those low cost options are just going away because finally the free ride given to use by cheap fossil fuels is going away and things like moores law have already reached the limit of where you can add value to keep the number close to the 70s dollar number.