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American Living Standards, 1888-1994: Evidence From Consumer Expenditures


  • Dora L. Costa


I use micro data on food and recreation expenditures from 1888 to 1994 to provide the first estimates of overall CPI bias prior to the 1970s and new estimates of bias since the 1970s and to reassess long-run growth rates. I find that CPI bias was -0.1 percentage points per year between 1888 and 1919 and rose to 0.7 percentage points per year between 1919 and 1935. CPI bias was low in the 1950s and 0.3 percentage points per year in the 1960s and then rose to 2.7 percentage points per year between 1973 and 1982 before falling to 0.6 percentage points per year between 1983 and 1994. Inadequately accounting for the introduction of new consumer goods probably was the biggest source of bias between 1919 and 1935. Revised growth rates suggest that despite the Great Depression real per capita personal income was not falling but was rising by 0.5 percentage points per year between 1919 and 1935 and that growth rates were not stagnant in the 1970s but were almost as high as in the 1960s (4.0 and 3.2 in the 1960s and 1970s, respectively).

Suggested Citation

  • Dora L. Costa, 2000. "American Living Standards, 1888-1994: Evidence From Consumer Expenditures," NBER Working Papers 7650, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7650
    Note: AG DAE

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    References listed on IDEAS

    1. Martin Neil Baily, 1981. "Productivity and the Services of Capital and Labor," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 1-66.
    2. Bruce W Hamilton, 1998. "The True Cost of Living: 1974 - 1991," Economics Working Paper Archive 395, The Johns Hopkins University,Department of Economics.
    3. Hausman, J. A. & Newey, W. K. & Powell, J. L., 1995. "Nonlinear errors in variables Estimation of some Engel curves," Journal of Econometrics, Elsevier, vol. 65(1), pages 205-233, January.
    4. Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
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    Cited by:

    1. Onur Sunal & Özge Sezgin Alp, 2016. "Effect of different price indices on linkage between real GDP growth and real minimum wage growth in Turkey," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(1), pages 1-10, February.

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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