Richardson_D wrote: >"Consumer Choice and the CPI: Tossing a Variable Into the Market Basket" is >the title of a "Trendlines" article by John M. Berry in the Washington Post. >Berry says that BLS has been publishing an experimental version of the CPI >that adjusts for consumer substitution of an item when a similar one goes up >in price. A version of this formula, to be used officially beginning next >month, lowers the index's annual increase by about 0.2 percentage points. >... This change, one of a series of alterations the agency has made in the >CPI over the past several years to make it a truer measure of shifts in the >cost of living, will be important for a wide swath of the U.S. population. >For instance, it will reduce the annual cost-of-living adjustments in many >government benefit programs, such as Social Security, relative to what the >COLAs would have been without the change. It also will slightly reduce the >annual adjustments made in parts of the personal income tax code to offset >inflation, such as the size of personal exemptions, the standard deduction, >and the so-called income break points between different tax brackets. ... >When BLS Commissioner Katharine G. Abraham announced in April that the new >formula, known as a geometric mean, would be used beginning in January, she >noted that substitution isn't a simple matter. ... Ok, the adjustments to the CPI so far have lowered it by 0.4 points, and here we've got another 0.2. It looks like the Boskinites have won. Last time I said that, people disagreed, but I'm going to say it again. Doug
