[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-322412-105":59,"doc-detail-322412-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","the-consumer-price-index-and-national-saving-economic-commentary","The Consumer Price Index and National Saving - Economic Commentary","","The Economic Commentary examines a proposal to adjust the Consumer Price Index (CPI) to better represent true cost-of-living increases driven by inflation. It argues that using a downward-adjusted cost-of-living measure can reduce long-run federal deficit pressures and, more importantly, raise the nation’s saving rate. The analysis also explains how CPI construction may overstate cost-of-living changes due to substitution effects, retailing shifts, quality improvements, and new goods—creating an upward bias.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/the-consumer-price-index-and-national-saving-economic-commentary/322412/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/the-consumer-price-index-and-national-saving-economic-commentary/322412.png","ImageObject",300,407,{"name":92,"@type":93},"Emma Wilson","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-22","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":39},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"Why does the CPI potentially overstate the true increase in the cost of living?","Question",{"text":112,"@type":113},"Because CPI measurement uses a fixed market basket from earlier periods and records it using current prices, it does not reflect changes in what people actually buy when relative prices shift. This can create an upward bias relative to recipients’ real cost-of-living changes.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"What are the two main ways to implement the cost-of-living indexing policy?",{"text":117,"@type":113},"One approach applies indexing only to specific programs, such as Social Security benefits at a lower inflation rate than CPI. The other approach adjusts CPI itself comprehensively using a downward-adjusted index to reduce indexed outlays and increase tax revenues.",{"name":119,"@type":110,"acceptedAnswer":120},"How does improved cost-of-living measurement increase national saving?",{"text":121,"@type":113},"The commentary states that the higher national saving comes from lower private consumption induced by the policy, rather than from a direct reduction in the government’s absorption of resources. Over time, this improves saving outcomes alongside deficit considerations.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},322412,1790084446,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":39,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},3848291630094,"https://eur-avatar.wpscdn.com/davatar_085a072bc5b1113ac321206ff7593b45","The Consumer Price Indexand National Saving  \nby Michael F.Bryan and Jagadeesh Gokhale  \nAIthough a majority of U.S.lawmak-ers now favor the goal of balancing thefederal budget within the next decade,there is little consensus on how toachieve it.One current proposal is thatthe Consumer Price Index(CPI)shouldbe adjusted to better reflect the cost-of-living increases that result from infla-tion.If adopted,this measure will notonly improve the long-run deficit out-look but,more importantly,will boostthe nation's flagging saving rate.  \nThere are two possible ways to imple-ment such a policy.First,it may be intro-duced only for a particular program.Forexample,Social Security benefits—thelargest federal transfers—may be in-dexed for inflation at a lower-than-CPIrate each year.This course was recom-mended in the early 1980s by MartinFeldstein,then chairman of PresidentReagan's Council of Economic Advi-sers.²In this scenario,the reduction ininflation indexing could be viewed as a\"deductible”against Social Security'sprovision of retirement benefits andother insurance.  \nAlternatively,such a policy may beintroduced comprehensively by adjust-ing the CPI itself.3 Thisapproach ismotivated by the belief that,for severaltechnical reasons,the CPIoverstatesactual increases in the cost of living.Using a downward-adjusted price indexto measure cost-of-living changes woulddecrease future outlays for all federaltransfers that are indexed by law.In  \naddition,it would increase federal taxrevenues because of a slower upwardrevision in income tax brackets—whichare also indexed for inflation.  \nAlthough the desire to reduce annual fed-eral deficits is behind the current interestin this idea,the real benefit of a new cost-of-living index will show up in highernational saving.4 This is true because anew index will not,by itself,lower thegovernment's absorption of resourcesRather,increased national saving willresult from the lower private consump-tion induced by the policy.This Eco-nomic Commentary summarizes the casefor redefining the CPI and provides esti-mates of the additional national savingthat would be generated if such a policywere implemented beginning in 1996.  \n# ■ Causes of Upward\n\nBias in the CPI  \nTo one seemingly direct question,\"Howmuch have prices risen?\"a statisticianquickly counters with another:\"Prices ofwhat?\"If the composition of goods andservices changes between two periods,we can record price changes for thethings we consumed in an earlier period,for the things we consume in the currentperiod,or for some combination of thetwo.From a statistical perspective,thereis little basis for preferring any of theseapproaches.Indeed,it is possible toimagine many \"correct\"answers to thefirst of the questions posed.  \nOctober 15,1995  \nAdjusting the CPI to reflect the trueincrease in the cost of living and low-ering cost-0f-living adjustments forSocial Security benefits will alleviatetwo long-range problems—escalatingfederal budget deficits and exceed-ingly low national saving.  \nEconomists usually recast that question.\"When faced with changing prices,\"they ask,\"how much would we have tocompensate someone to keep him just aswell off as before?\"Here,of course,there is only one correct answer,whicheconomists have dubbed the change inthe cost of living.To date,however,noone has proposed a practical way toquantify this change,and the task haslargely been thrown back to the statisti-cians.In constructing the CPI,theBureau of Labor Statistics(BLS)haschosen to measure the cost of goods andservices consumed in a previous periodin terms of current prices.  \nIn all likelihood,this approach overstatesactual changes in the cost of living,sinceit does not account for the changes peo-ple make in the composition of goodsthat they purchase—often in response toprice changes.If we were to comparecurrent spending patterns with those of1982-84(the period on which the CPIisnow based),we would expect to see avariety of differences.  \nPresumably,household spending w","cbCaibQ7zdRvUSBe","https://ap.wps.com/l/cbCaibQ7zdRvUSBe","pdf",1330252,"English","# Causes of Upward Bias in the CPI\n## CPI indexing and cost-of-living measurement\n## Substitution effects and market basket assumptions","[{\"question\":\"Why does the CPI potentially overstate the true increase in the cost of living?\",\"answer\":\"Because CPI measurement uses a fixed market basket from earlier periods and records it using current prices, it does not reflect changes in what people actually buy when relative prices shift. This can create an upward bias relative to recipients’ real cost-of-living changes.\"},{\"question\":\"What are the two main ways to implement the cost-of-living indexing policy?\",\"answer\":\"One approach applies indexing only to specific programs, such as Social Security benefits at a lower inflation rate than CPI. The other approach adjusts CPI itself comprehensively using a downward-adjusted index to reduce indexed outlays and increase tax revenues.\"},{\"question\":\"How does improved cost-of-living measurement increase national saving?\",\"answer\":\"The commentary states that the higher national saving comes from lower private consumption induced by the policy, rather than from a direct reduction in the government’s absorption of resources. Over time, this improves saving outcomes alongside deficit considerations.\"}]","The Consumer Price Index and National Saving - Economic Commentary | PDF",1789962651,13]