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PAD-81-12 1 (1981-04-16)

handle is hein.gao/gaobabbul0001 and id is 1 raw text is: 



BY THE COMPTROLLER GENERAL



Report To The Congress


OF THE UNITED STATES


Measurement Of Homeownership Costs


In The Consumer Price Index

Should Be Changed



The consumer price index is widely used to adjust wag-                   111111     ii
es and Federal transfer payments in response to price
level changes. It also indicates the success of econom-                      114922
ic policy in maintaining price stability. Many people
have charged that this index is not appropriate for
these uses because of conceptual shortcomings in
measuring homeownership costs.

GAO examines present and alternative measures of
homeownership costs, the largest component of the
consumer price index. The present method measures
changes in the cost of purchasing, financing, and main-
taining houses. Alternatives that measure changes in
the monthly cost of consuming the services these
houses provide (e. g., interest, taxes, insurance, main-
tenance) more accurately measure average changes in
housing costs for all homeowners.

GAO recommends that the

      --Bureau of Labor Statistics substitute a
      measure of the cost of consuming housing
      services for the existing homeownership
      component of the consumer price index and

      --Congress provide the funds necessary for
      this modification.







                                                                            PAD-81-12
      'r,, ,,tX, %                                                    APRIL 16, 1981


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