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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
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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