At What Price?: Conceptualizing and Measuring Cost-of-Living by National Research Council, Division of Behavioral and Social PDF

By National Research Council, Division of Behavioral and Social Sciences and Education, Commission on Behavioral and Social Sciences and Education, Committee on National Statistics, Measurement, and Other Statistical Issues in Developing Cost-of-Living Inde

ISBN-10: 0309074428

ISBN-13: 9780309074421

ISBN-10: 0309512174

ISBN-13: 9780309512176

How good does the patron expense index (CPI) replicate the adjustments that individuals really face in dwelling charges - from apples to pcs to future health care? Given the way it is used, is it fascinating to build the CPI as a cost-of-living index (COLI)? With what point of accuracy is it attainable to build a unmarried index that represents alterations within the dwelling expenses of the nation's diversified inhabitants? "At What Price?" examines the rules for customer cost indexes, evaluating the conceptual and sensible strengths, weaknesses, and boundaries of conventional "fixed basket" and COLI approaches.The ebook delves right into a variety of complicated concerns, from tips on how to take care of the altering caliber of products and providers, together with difficult-to-define clinical prone, to tips on how to weight the expenditure styles of other shoppers. It types in the course of the key attributes and underlying assumptions that outline each one index style with a view to solution the query: should still a COLI framework be utilized in developing the U.S. CPI? In answering this question, the publication makes techniques as to how the Bureau of work information can proceed to enhance the accuracy and relevance of the CPI. With conclusions which can have an effect on the quantity of your subsequent pay increase, "At What Price?" is necessary to each person, and a must-read for coverage makers, researchers, and employers.

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Extra resources for At What Price?: Conceptualizing and Measuring Cost-of-Living and Price Indexes

Sample text

Moreover, goods with completely new characteristics, like DVDs, come to the market and gradually take over some or all of the market for other goods. In the case of a COLI, the complexities, lack of data, and deviations from the assumptions of the theory that are sometimes encountered in the real world impose limits on the extent to which its implied objective can be achieved. Attempting to push beyond those limits risks introducing an unacceptable amount of subjectivity and the possibility of significant error into index measurement.

If substitution behavior plays a major role in explaining changes in quantities purchased between the reference and comparison periods, goods that have experienced relatively large price increases will tend to receive higher weights in the Laspeyres than in the Paasche index, and the opposite will be true for goods that have experienced relative price decreases. Thus, the Paasche index typically tends to produce a lower estimate of average price increase than the Laspeyres index. Notice, however, that the Laspeyres index overstates the cost of maintaining the reference period’s standard of living while the Paasche index understates the cost of maintaining the comparison period’s standard of living.

Is there a theoretical foundation for this view? Is it exceptional to this particular issue? Are there grounds for establishing limits on the use of quality adjustments? Are there general principles that can be invoked, or is this the kind of issue that must be settled on a case-by-case basis? In Chapter 2 we consider these issues in general and in Chapter 6 examine the medical care example in more detail. Measurement Occasions for quality adjustment continually arise when field agents find that sample items no longer appear on outlet shelves.

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At What Price?: Conceptualizing and Measuring Cost-of-Living and Price Indexes by National Research Council, Division of Behavioral and Social Sciences and Education, Commission on Behavioral and Social Sciences and Education, Committee on National Statistics, Measurement, and Other Statistical Issues in Developing Cost-of-Living Inde


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