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Toward a More Accurate Measure of the Cost of Living. Final Report to the Senate Finance Committee from the Advisory Commission to Study the Consumer Price Index (Updated Version).

PB97197164

Publication Date	1996
Page Count	108
Abstract	The consequences of changes in the Consumer Price Index overstating changes in the cost of living can be dramatic. This report proceeds as follows: Section II discusses the historical and prospective budgetary implications of changes in the CPI overstating changes in the cost of living. Section III presents an overview of how the CPI is actually constructed. Section IV details why the CPI is not a true cost of living index and discusses substitution bias. Section V describes in greater detail the current procedures employed by the BLS to adjust for quality change and presents a survey of the studies and the Commission's judgment on the bias from quality change and new products. Section VI summarizes the Commission's findings on the size of the bias by type, plus the range of plausible overall bias. Section VII discusses the issue of separate price indexes for different groups and of aspects of the quality of life that fall primarily outside the market based consumption focus of cost-of-living measures. Section VIII presents the Commission's detailed recommendations of ways to produce and to use more accurate cost-of-living measures. The Conclusion offers a brief perspective and some cautionary notes on the use of the findings of the Commission.
Keywords	Cost of living Consumer pride indexes Income Price index Surveys
Source Agency	Single Entry
Corporate Authors	Advisory Commission to Study the Consumer Price Index (U.S. Senate), Washington, DC.
Supplemental Notes	Color illustrations reproduced in black and white.
Document Type	Technical Report
NTIS Issue Number	199723

Toward a More Accurate Measure of the Cost of Living. Final Report to the Senate Finance Committee from the Advisory Commission to Study the Consumer Price Index (Updated Version).

Toward a More Accurate Measure of the Cost of Living. Final Report to the Senate Finance Committee from the Advisory Commission to Study the Consumer Price Index (Updated Version).
PB97197164

Publication Date	1996
Page Count	108
Abstract	The consequences of changes in the Consumer Price Index overstating changes in the cost of living can be dramatic. This report proceeds as follows: Section II discusses the historical and prospective budgetary implications of changes in the CPI overstating changes in the cost of living. Section III presents an overview of how the CPI is actually constructed. Section IV details why the CPI is not a true cost of living index and discusses substitution bias. Section V describes in greater detail the current procedures employed by the BLS to adjust for quality change and presents a survey of the studies and the Commission's judgment on the bias from quality change and new products. Section VI summarizes the Commission's findings on the size of the bias by type, plus the range of plausible overall bias. Section VII discusses the issue of separate price indexes for different groups and of aspects of the quality of life that fall primarily outside the market based consumption focus of cost-of-living measures. Section VIII presents the Commission's detailed recommendations of ways to produce and to use more accurate cost-of-living measures. The Conclusion offers a brief perspective and some cautionary notes on the use of the findings of the Commission.
Keywords	Cost of living Consumer pride indexes Income Price index Surveys
Source Agency	Single Entry
Corporate Authors	Advisory Commission to Study the Consumer Price Index (U.S. Senate), Washington, DC.
Supplemental Notes	Color illustrations reproduced in black and white.
Document Type	Technical Report
NTIS Issue Number	199723