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117 Monthly Lab. Rev. 11 (1994)
Experimental Price Index for Elderly Consumers

handle is hein.journals/month117 and id is 453 raw text is: Experimental price index for elderly consumers An experimental consumer price index for older Americans rose somewhat faster than each of two published BLS Consumer Price Indexes; as might be expected, expenditures for medical care accounted almost entirely for this difference he Consumer Price Index (CPI) of the Bureau of Labor Statistics measures the average change in prices over time for a fixed market basket of goods and services for two population groups. The CPI for All Urban Consumers (cPI-u) represents the spending hab- its of about 80 percent of the population of the United States. The CPI for Urban Wage Earners and Clerical Workers (cPI-w) is a subset of the CPI-U and represents about 32 percent of the to- tal U.S. population. The 1987 amendments to the Older Americans Act of 1965 directed BLS to develop an experi- mental index for a third population of consum- ers: those 62 years of age and older. In its 1988 report to Congress, BLS observed that from De- cember 1982 to December 1987, the experimen- tal consumer price index for older Americans rose slightly faster than the cPI-U and cPI-W.1 (See table 1.) This article updates the analysis of the behav- ior of the experimental index for older Ameri- cans for the period from December 1987 through December 1993. Over this 6-year period, the experimental price index rose 28.7 percent, slightly more than the increases of 26.3 percent for the CPI-u and 25.5 percent for the CPI-w. Methodology, data, and limitations Although the study discussed in this article indi- cates a higher overall inflation rate for older Americans compared with the rates for the offi- cial CPI population groups, any conclusions drawn should be used with caution because of the various limitations inherent in the methodology. Expenditure weights. For each CPI population group, item strata are weighted according to their importance in the spending patterns of the popu- lation. The population of older Americans used for the experimental price index was defined to be all urban noninstitutionalized consumer units that were either 1. unattached individuals who were at least 62 years of age; or 2. members of families whose reference per- son (as defined in the Consumer Expenditure Sur- vey) or spouse was at least 62 years of age; or 3. members of groups of unrelated individu- als living together who pool their resources to meet their living expenses and whose reference person was at least 62 years of age. In the 1982-84 Consumer Expenditure Sur- vey, which is used as the source of expenditure weights in the current cPI, 19 percent of the total sample of eligible urban consumer units (3,135 out of 16,500) met this definition. Because the number of consumer units used for determining weights in the experimental index was relatively small, ex- penditure weights used in the construction of the experimental price index have a higher sampling error than those used for the larger populations. Monthly Labor Review May 1994 11 Nathan Amble and Ken Stewart Nathan Amble and Ken Stewart are economists in the Division of Consumer Prices and Price Indexes, Bureau of Labor Statistics.

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