The Reliability of Selected Price Indexes as Measures of Price Trends

Résumé du livre

This examination of recent criticisms of selected official price indexes, and the procedures followed by the Dominion Bureau of Statistics with regard to some of the problem areas, may be briefly summarized as follows: Some of the criticism of the Consumer Price Index is misdirected since it is concerned with the shortcomings of this index as a measure of changes in the cost of living, (the cost of maintaining a constant level of satisfaction) rather than with its primary purpose of measuring the changes in the cost of purchasing a constant basket of goods and services. The difference between a Consumer Price Index and a cost of living index would be substantial if items purchased changed substantially in response to changes in relative prices and tastes, or changes in tastes took place which significantly altered the satisfaction obtained from a given collection of goods, or completely new products (such as television), which had no counterpart in the constant basket of goods of the consumer price index, were introduced. If this difference were judged to be important it might be desirable to devote the considerable resources of economics and statistical talent required to try and solve the many operational problems involved in constructing a satisfactory cost of living index. A theoretical case for a substantial difference between these indexes has been made, but it has not been supported by much documentation. No recommendation is made for any work on a cost of living index because of more pressing needs.