This message is in MIME format. Since your mail reader does not understand this format, some or all of this message may not be legible. ------ =_NextPart_000_01BD5F15.804CC5D0 FYI John Greenlees is the Asst. Comm. of Labor Statistics for Consumer Prices and Price Indexes. ---------- From: Greenlees_J Sent: Wednesday, April 01, 1998 9:17 AM To: DCPPISTAFF; Bubba_CPI Subject: New CPI Formula The BLS announced today that neither the arithmetic mean formula nor the geometric mean formula is appropriate for the shelter component of the CPI. Instead, Rent and REQ [Homeowners' Equivalent Rent] will employ the so-called "Golden Mean" formula originally defined by Horace and used in many Latin-speaking countries. The Golden Mean is appropriate for an egalitarian consumer utility function and is exact for the cost-of-living index when all consumers receive adequate shelter. As Horace writes (Odes, x, l 5) "Whoever cultivates the golden mean avoids both the poverty of a hovel and the envy of a palace." The Golden Mean also works well under the "Test Approach" to index numbers because it satisfies the Golden Rule test, i.e.: "When the price of item i increases, the index cannot rise by more than item i would want it to rise if the price of item j increased, if item j were in item i's place." Few writers have expressed opposition to the Golden Mean, although some comments are somewhat delphic and difficult to interpret. For example, Garcia, in "The Golden Road (To Unlimited Devotion)" writes "Take a vacation, fall out for a while Summer's coming in, winter's goin' out in style Well, light out smokin', honey, have yourself a ball 'Cause your mama's gone to Memphis She won't be back 'til the fall." Implementation of the Golden Mean formula for Rent and REQ must be accomplished by April 1, 1999. ------ =_NextPart_000_01BD5F15.804CC5D0 b3NvZnQgTWFpbC5Ob3RlADEIAQWAAwAOAAAAzgcEAAMACgAjACEABQAvAQEggAMADgAAAM4HBAAD AAoAHgA6AAUAQwEBCYABACEAAABCM0I2ODM1MkRBQ0FEMTExODg4RTAwMjBBRjlDMDMwOAAcBwEE gAEAFAAAAEZXOiBOZXcgQ1BJIEZvcm11bGEAEwYBDYAEAAIAAAACAAIAAQOQBgC0CAAAHQAAAAMA DQAAAFJJQ0hBUkRTT05fRAAAAAADABpAAAAAAB4AMEABAAAADQAAAFJJQ0hBUkRTT05fRAAAAAAD Y2gKwHNldG4yBgAGwwKDMgPFAgBwzHJxEiAP/2YzEwwHE/0CgH0KgAjPCdkCgAqBDbHBC2BuZzEw MxUACwpnFQIMAROQb3QFkAVARgRZSRmsICBKb2h1A6BHCdJsCeAEIAQAIBh0aGUV4AQQdC4gCQhQ bW0d4G9mIExrAaAFsVMBkHQEAB8gY98EIAIQBcAIUACAdQeABcBaUAUQYweRAHBkIGQg0kkg8GV4 B5AuGa8atIMKhQqLbGkxNDQC0XxpLSTTDNAk0wtVEvIx+jYahy0ndwqHJisMMBqXPQNhOih+GpYM ghyIX0q/KB8pLQZgAjAqXytrVwmAwm4HkGRheSwV4BOQCQMRMDExkDE5OTigIDk6MTcV4E0s7xkp LVRvLy8ra0RDUABQSVNUQUZGO4AgQnViYmFfNyDmSTMfKS1DYzU/NkwHQBJ0AiBfSzewRml4ERzg cl9EN7BTaG/qZQDAaz1BTzhvLf434P5qGtE6jytrB8I4MRsABbB8bXULYCN/GY80lx1xQtZMBfAA cG4IYG4goCEArzyQMWEdUR8QIDEwaR1hvwXAHWIKwEghB4AfUSAHgD8DkR+hQ1JH8AWxHWJnZZ8D cBIAIIFJbB0xYXAakd8xwR8QHYAfoh1icx1wPIDzIEEFoG1wAiAu8R5SHWK9ODEuRAUhgB3ASYBk MZBGUk6CIOJSRVEbTluRRM1pIEhK4W93MTABEeAnIEVxdWl2bwdAToJQchtNXUTPGrQg3QPwbAMg PdALUG9Hkk2BOG8tYwdAHOAhACJH1wbwDbADoE1JgSJJtwWw/GlnC4BYwUeQDbELgEchdmJHkFNQ cgDQSKEg8XX/EfAhAAuASWAAcEeQHpAfIFBuLXNwSYBrC4Bn/04RRvBLESHRQ5xGMlk5TC/zBbED kWVnB0BIIEjBA5G7BaAgBXUfIGJhR5BmRvH/HyACICDTHTEhsADQBUBNJqsFoB3ALR5gLSSwdl4S /wuAIaFXcB1wZHFXoWL2BCD/F0AgoFRASKENsFQgTOJNpbcd4B2RW9Z3SNEHkShSTn0ah08NsBNg Vh8awzGQeJMxkAMgNSkjZiJXPbH/aLBOAUNgHyBUUGriSoNZRMFJc2F2b2lkBCAG4P8dYB1TTlBv 0WPRHmFKID2w32iwAyAg4h1iCfB2cyVEMPMLYCCgLiJe/2ALB0BYgOtXcAWwawQgd03AAyBG8PME gR1TIlQHkAVAMbAakV0A0GhZ4DyQZsVuICBiv2gietBYsFyRHSAFQHMfEnclIHCVWTVSQ2AdgGrh dOkxkGkudWA6bxhZcXKD9yEzHmFq0W0dIFzRBQBJgP0R8HMxkB1iZtRYsEbBBUD/BRB7cVuxBGAX QEeiYLF/1Pd3wENgIQB3AHAFQHuhehHvgfMGkH7vf/BqgCdQQYTh34XleCCCkVzhf8QnBCALUf91 XxsAB9Fqs2gxEcBosSGw/xOQB5BcokygTlAAkGRDehGffHlZojGQPHE9sHVncmD/WIAHgE4SB4AC MCDBgpGOMsdnMEfRDbBscGhJQSDi/mQGkCUgcBJ6BE3hizEd0VdDEmTyV+FlMZBHCsBjfwcwfbED oHkQfIl5sCEAKHk1ECBVHNAHcGrRIQBE92/AGrBkUSlZ4Gq0Q5x5EL898XNhVFBYsGRCMZBmZ4Lf CGBlREogZzADEGVEBUBQ/Y6hcoiBTiFmlDGQA/CRgn+IgXEAC4BT8JkCXOEdwHnfmdcxAFegbqFa oGhOoZkR9nMEYF4BJzGQPbAxMDGB7YrDeQhhEfBsc1I4AFeg+UQFJ0N7U6ASXQEAwJwD/zEwegJZ oE5AkCCWpj2gapGdAiAnBUB60KCxY2uhYO9jkR1TmLJ1fkmSoo6ymEP/TrZgGknGH6JQeklgXJCk g38A0E4iJLBNoVuTMbQyJDlfXu1Dn0SvIv0WYQCxMAAAAwDxPwkEAAADAP0/5AQAAAMAJgAAAAAA AwA2AAAAAAACAUcAAQAAADAAAABjPVVTO2E9IDtwPUJMUztsPURDUENTTUFJTDEtOTgwNDAzMTUz NTMzWi0yNDUxMQAeADhAAQAAAA0AAABSSUNIQVJEU09OX0QAAAAAHgA5QAEAAAANAAAAUklDSEFS RFNPTl9EAAAAAEAABzDA6yskFl+9AUAACDDQxUyAFV+9AR4APQABAAAABQAAAEZXOiAAAAAAHgAd DgEAAAAQAAAATmV3IENQSSBGb3JtdWxhAB4ANRABAAAAQAAAADxFMTZFRUE0Q0U5QzdEMDExOUFF NDAwNjA5NzA1Q0Q4ODQ3MDg4RkBkY3Bjc21haWwxLnBzYi5ibHMuZ292PgALACkAAAAAAAsAIwAA AAAAAwAGEJA7GK0DAAcQVQUAAAMAEBAAAAAAAwAREAEAAAAeAAgQAQAAAGUAAABGWUlKT0hOR1JF RU5MRUVTSVNUSEVBU1NUQ09NTU9GTEFCT1JTVEFUSVNUSUNTRk9SQ09OU1VNRVJQUklDRVNBTkRQ UklDRUlOREVYRVMtLS0tLS0tLS0tRlJPTTpHUkVFTkxFAAAAAAIBfwABAAAAQAAAADxFMTZFRUE0 Q0U5QzdEMDExOUFFNDAwNjA5NzA1Q0Q4ODQ3MDg4RkBkY3Bjc21haWwxLnBzYi5ibHMuZ292PgBf pQ== ------ =_NextPart_000_01BD5F15.804CC5D0--
