or first class on airlines even for personal trips, and so on down a long list of differences with low-income groups.


An example of the inability of the present data system to answer important questions frequently surfaces in discussions of whether the cost of living for the elderly rises at a faster or slower rate than the CPI as a whole. During the 1995 Senate Finance Committee hearings on the CPI, in response to a question from Senator Kent Conrad about a separate price index for the elderly, former BLS Commissioner Janet Norwood (1995:80) said: “The real point is that we do not know. And we do not know because we do not have prices that are collected for items that are purchased by the elderly.” The Boskin commission (Boskin et al., 1996:72), in its discussion of a separate price index for the elderly, points out that an index for the elderly calculated by using CPI prices and reweighting to match the expenditure patterns of the elderly does not differ substantially from the index for the non-elderly but recognizes that “the prices actually paid, not just expenditure shares, may differ.” Actually, for the period December 1990 to December 1995, the experimental CPI-E rose by 15.9 percent, somewhat more than the CPI-U and CPI-W, which rose by 14.7 and 14.1 percent, respectively (see www.bls.gov/news.release/cpi.br12396.a06.htm). Most of the difference can be explained by the larger expenditure share on the CPI medical care component (which increased faster than the average of other prices); a small portion of this effect was offset by a lower share by the elderly on “other goods and services,” a major expenditure group that also showed higher-than-average price growth.

The Boskin commission concluded its discussion by acknowledging that “work on this subject remains to be done” (p. 72). In an article discussing the Boskin commission report, after quoting both Norwood’s testimony and the Boskin commission report, Pollak (1998:71) writes:

Mention of “items that are purchased by the elderly” and “prices actually paid” turns the discussion of group indexes and representative consumers toward the items and qualities priced for the index and the outlets in which they are priced. The literature on group indexes has treated the construction of household indexes as a distinct, prior task and focused on the problem of aggregating household indexes into a group index. In practice, however, because we do not first construct household indexes and then aggregate them, our definition of the group index has implications for the items and qualities we price and the outlets in which we price them.

Would a price index for the elderly behave differently than the overall CPI if data were collected on items and qualities consumed by the elderly and on the prices paid in outlets where the elderly shop? To have a definitive answer to this question, or even relevant evidence instead of speculation and conjecture, an

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