Jeff Madrick writes: >Certainly quality improvements have to be taken into account. But so must many other factors that affect the standard of living, including the quality of public goods, like transportation and the environment.
>The Schultze panel concludes that such an index is inherently too ambiguous to develop in an objective way. How does one account for traffic congestion, for example? A car is worth less if traffic deteriorates. If the crime rate rises, people may have to buy more security devices. Should that be translated into a fall in living standards?< FWIW, I wrote an article that tries to bring in these kinds of effects into measuring the "cost of living" (COL) and its inflation rate, published in Madrick's magazine, CHALLENGE, March-April 2001. For the period 1951-98, the annual COL inflation rate was about 0.4 of a percentage point higher _per year_ than the inflation rate implied by the personal consumption expenditure deflator and about 0.1 of a percentage point high than that implied by the CPI. However, I agree with Madrick that in reality, the inflation rate can't be measured. Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
