Dean Baker: Why Are Proponents of the Chained CPI So Scared of Data?

Friday, 15 February 2013 14:58

Like the global warming deniers, proponents of basing the Social Security cost-of-living adjustment (COLA) on a chained CPI are scared to death of data. They are all anxious to assert that the chained CPI is a more accurate measure of the cost of living and therefore it should provide the basis for the COLA. However, they have no research on which to base this assertion.

There is research showing that the chained CPI is a better gage of the cost of living for the population as a whole. But we know seniors have substantially different consumption patterns than the population as a whole. They tend to consume more housing and health care and spend less on new cars, computers, and smart phones. The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index that shows seniors experience a higher rate of inflation than the population as a whole.