Measurement Error in the Consumer Price Index: Where Do We Stand?

David E. Lebow and Jeremy B. Rudd

Journal of Economic Literature, 2003, vol. 41, issue 1, 159-201

Abstract: We survey the evidence on CPI bias and provide our best estimate of its magnitude. We also identify a "weighting" bias that has not been quantified previously. We estimate that the CPI currently overstates the rate of change in the cost of living by about 0.9 percentage point per year, with a confidence interval ranging from 0.3 to 1.4 percentage points. Our estimate is boosted by new evidence that substitution bias has increased sharply since the mid-1990s, and is reduced by the cumulative impact of a variety of recent improvements to BLS procedures. The study discusses potential areas for further improvement.

Date: 2003
Note: DOI: 10.1257/002205103321544729
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (98)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/002205103321544729 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:jeclit:v:41:y:2003:i:1:p:159-201

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

Journal of Economic Literature is currently edited by Steven Durlauf

More articles in Journal of Economic Literature from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().