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Is the United States CPI Biased Across Income and Age Groups?

Author

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  • S. Nuri Erbas
  • Chera L. Sayers

Abstract

The recent Boskin Commission Report (1996) underscores a significant upward bias in CPI measurement in the United States. This may result in excessive cost-of-living adjustment (COLA) of some entitlements in the federal budget because COLA is indexed to CPI. This paper presents some evidence that overall CPI may be biased against lower income elderly households, the primary beneficiaries of COLA. Although a downward adjustment in CPI resulting in an across-the-board cut in COLA of entitlements may yield significant budgetary savings, it may result in a deterioration in income distribution against lower income elderly households.

Suggested Citation

  • S. Nuri Erbas & Chera L. Sayers, 1998. "Is the United States CPI Biased Across Income and Age Groups?," IMF Working Papers 98/136, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:98/136
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    Cited by:

    1. Eduardo Ley, 2005. "Whose inflation? A characterization of the CPI plutocratic gap," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 634-646, October.
    2. repec:ebl:ecbull:v:4:y:2002:i:3:p:1-5 is not listed on IDEAS
    3. Álvaro Montenegro & Lina M. Ramírez Villegas, 2016. "La inflación de los adultos mayores en Colombia," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(35), pages 197-207, July-Dece.

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