The following HTML text is provided to enhance online
readability. Many aspects of typography translate only awkwardly to HTML.
Please use the page image
as the authoritative form to ensure accuracy.
At What Price?: Conceptualizing and Measuring Cost-of-Living and Price Indexes
sporadically or systematically.9 As answers to these questions gradually emerged, they could provide important information for researchers and have significant ramifications for government indexing policies, either confirming the validity of using an overall index or suggesting the desirability of using subgroup indexes. Even the collection of data for selected expenditure categories within a few demographic groups, undertaken periodically, could usefully inform public dialogue about social issues.
SUGGESTED RESEARCH AND TESTING
Before even assessing the feasibility of collecting the kind of data we have described, a substantial amount of preliminary research would need to be done. Fortunately, that research itself is likely to produce valuable information about the extent to which rates of inflation in some major categories of goods differ among some subgroups of the population.
A necessary prerequisite to collecting usable price data from individual households is the ability of the collection system to provide the product identification sufficient to enable BLS to match identical items whose purchases are reported by different households and to make appropriate substitutions when items disappear. Thus, examining what is already known about the use by survey respondents of handheld scanners and testing their use and that of other information technology ought to have a high priority. Equally important is exploring the willingness of respondents to record, with a reasonable degree of accuracy, a fairly large volume of information over a sustained period of time, especially when the use of scanners may not be feasible. We have not attempted to outline a formal program of research and testing. But we offer alternative possibilities for collecting preliminary information:
An early project might concentrate on a cross-sectional—rather than longitudinal—study to determine the extent to which, within a selected set of strata, individual households pay different prices for the same items and how those differences are related to age, income, and perhaps other household characteristics. As noted above, differences among households in the level of prices paid need not be accompanied by significant differences in the rate of price changes over time. But documenting in some depth the existence of substantial differences in prices paid, systematically related to income and other demo-
Within each population subgroup the aggregation of individual item prices into strata indexes would be done with “plutocratic” expenditure weights, but in each subgroup the strata indexes could be aggregated into a subgroup average with democratic weights, and in turn the overall CPI could be aggregated from the subgroup indexes with democratic weights.