chapter  IV
9 Pages

The CPI and a Cost-of-Living Index Compared

The distinction between a price index and a cost-of-living index is a topic that has surfaced repeatedly in the debate over the CPI. In some cases it has been suggested that the problem with the CPI is that it is a price index and that what we really want is a cost-of-living index. For example, Franklin Raines, director of the Office of Management and Budget, in suggesting the establish­ ment of a commission to calculate a cost-of-living index, said that, “I think a smart group of people could get this done in a period of months instead of years.”39 But as Gordon notes in the citation above, the problems of produc­ ing a cost-of-living index, “a single generally accepted index of welfare,” are immense.