Standard of living

Narrowly defined (entirely in terms of consumption of goods and services), a measure of the extent to which preferences are satisfied which, given a set of prices that remain constant over a number of periods, can be measured by the amount of money spent. More generally, a measure that also captures broader aspects of well-being, such as health or happiness.

Stigler committee

The Price Statistics Review Committee of the National Bureau of Economic Research, chaired by George Stigler.

Superlative index

A price index that weights expenditure patterns from both the current (comparison period) and past (base or reference period) in the price ratio calculation.

Tornqvist index

A superlative index in which the rate of growth of individual prices is weighted by their share in the budget averaged over the base period and the current period.

Upper-level aggregation

The process whereby area/item strata indexes are combined to form the national CPI.

Upper-level substitution

A change in the proportions of expenditure on goods between item categories (e.g., chicken for beef). See consumer substitution.

Utility

The satisfaction derived from the consumption of goods or services.

Virtual price

The price of a new good that would have been just high enough, during a period prior to its appearance in the market, to drive quantity demand to zero.