Shifting Baseline Syndrome

InvestmentABCs1A shifting baseline is a change with respect to how a system is measured or evaluated, usually against previous reference points (baselines), which themselves may represent significant changes from even earlier states.  For example, the price of coffee has seen a very significant baseline shift. A cup of coffee may have only cost a nickel in the 1950s, but with the advent of “premium coffee, the baseline is much higher today — $1.38 for brewed coffee and $2.45 for an espresso-based drink. Few of us look at current coffee prices based on the 1950s model. For most of us, our standard point of reference has moved and moved a lot. Continue reading

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