cost-of-living index


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cost-of-living index

An indicator of the current price level for goods and services as compared to a base year.The base year is always set at a value of 1.0 or 100.As the cost of living increases (inflation), the number will increase, so that a cost of living index of 150 means things cost 50 percent more than they did in the base year. As the cost of living decreases (recession or depression) the number will decrease,so that a cost of living index of 93 means things cost only 93 percent of what they cost in the base year.The consumer price index is one such cost of living index.

References in periodicals archive ?
As Stapleford explains, however, "these restrictions had gender and racial consequences that undercut other efforts by the New Deal staff to make the survey and the cost-of-living index more inclusive.
If we divide money income by a cost-of-living index, the real income rises if and only if utility rises.
If they do not, changes in income level and its distribution can drive a wedge between the true cost-of-living index and the Tornqvist index.
Cost-of-living index number theory proceeds from the proposition that a consumption price index should measure the change in the cost of maintaining a fixed, or constant, standard of living.
Estimating this virtual price requires estimation of a demand function, which in turn provides the expenditure function, which allows exact calculation of the cost-of-living index.
We also calculate Fisher indexes, which are theoretically closer to a true cost-of-living index and which employ more recent information on expenditures.
That paper provides theoretical justification for the index formulas the Bureau of Labor Statistics uses to measure multifactor productivity, and for research estimates by BLS of how much a cost-of-living index that accounted for commodity substitution effects would differ from the Consumer Price Index.
Lott declared that President Clinton lacked the courage and leadership to deal with one of the principal issues, saving billions of dollars by recalculating the cost-of-living index in a way that would reduce inflationary increases for Social Security and other benefit programs.
One source of concern continues to be substitution bias, which arises from the use of a fixedweight Laspeyres index formula rather than a true cost-of-living index.
A true cost-of-living index, the commission's report said, should adjust for the changes in what people buy and where.
Therefore, the price of beef should be reduced to the current price of chicken, thus ratcheting down the cost-of-living index and the CPI.
If a new cost-of-living index led to cuts in all federal and private payments by the 1.