An official website of the United States government
United States Department of Labor
United States Department of Labor
The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information,
make sure you're on a federal government site.
The site is secure.
The
https:// ensures that you are connecting to the official website and that any
information you provide is encrypted and transmitted securely.
Office of Survey Methods Research
SHARE ON:
More Information
Published Year: 1996
Survey/Program(s): N/A
Catalog: Economic Working Paper
WP Number: WP-294
Publication Status / Disposition: See Journal of Economic Perspectives, Vol. 10, No. 4, Fall 1996, pp. 159-177.
Download PDF
Bias in the Consumer Price Index: What is the Evidence?
Abstract
Recent research has suggested that the upward bias of the U.S. Consumer Price Index may be significant, and correcting the biases would have important long-run effects on the federal budget deficit. This paper describes the sampling procedures used in constructing the CPI and gives simple examples of formula bias and quality adjustment. The empirical evidence on various biases is then reviewed, with an attempt to indicate which biases are reliably estimated and which estimates of bias are based on extrapolation and guesswork. This paper also discuss possibilities for further research leading to potential improvements in the CPI.