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Improving the ACCRA U.S. regional cost of living index

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  • Keith R. Phillips
  • Christina Daly

Abstract

The broadest and most commonly used measure of the cost of living across U.S. cities is the American Chamber of Commerce Research Association (ACCRA) index. This index is used by business and government organizations and the media to rank living standards and real wages across U.S. cities. In this study we reduce the aggregation bias in the index by calculating national average prices for the 59 item prices using population weights instead of the equal weight formula used by ACCRA. This correction results in a decline in the index values for all cities and changes in the rankings and bi-variate comparisons between city pairs. In some high-cost cities the index values decrease by over 25 percent, and in 74 percent of the cities the rank changes by greater than one spot.

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File URL: http://dallasfed.org/assets/documents/research/papers/2009/wp0902.pdf
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Paper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 0902.

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Date of creation: 2009
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Handle: RePEc:fip:feddwp:0902

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Keywords: Cost and standard of living ; Wages ; Prices;

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  1. Koo, Jahyeong & Phillips, Keith R & Sigalla, Fiona D, 2000. "Measuring Regional Cost of Living," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(1), pages 127-36, January.
  2. Michael Raper, 1999. "Self-selection bias and cost-of-living estimates," Journal of Economics and Finance, Springer, vol. 23(1), pages 64-77, March.
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