Department of Labor Logo United States Department of Labor
Dot gov

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.

How Much Does Formula vs. Chaining Matter for a Cost‐of‐Living Index? The CPI‐U vs. the C‐CPI‐U

Gregory Kurtzon


A large economics literature has debated the best formula to estimate a cost-of-living index (COLI). This study shows that formula does not matter for many purposes for an index chained at a monthly frequency once chain drift has been removed. Spurious chain drift is removed with a new method revealing the large majority of the difference between the CPI-U and the C-CPI-U (a COLI) is due to the CPI-U weights effectively chaining at the biennial frequency, rather than the difference in formula assumptions. This sufficiently justifies the C-CPI-U and similar chained indexes while also showing their assumptions are not critical.