Final answer:
Fishman believes the substitution bias and quality/new goods bias are fatal flaws of the CPI, leading to an overstatement of the true rise in cost of living and inflation.
Step-by-step explanation:
Fishman considers the substitution bias and the quality/new goods bias as fatal flaws of the Consumer Price Index (CPI). The CPI, which tracks a basket of goods and services, fails to account fully for changes in consumer behavior, such as switching to different goods when prices change (substitution bias), or the increased value consumers get from improvements in product quality or new products (quality/new goods bias). This results in the CPI overstating the true cost of living and the rise in inflation. Furthermore, the CPI predominantly tracks prices from physical locations rather than online websites like Amazon, where prices can often be lower.