[PEN-L:140] RE: phones

[Richardson_D <Richardson_D@xxxxxxx>]

Jim,
We try to get all price changes, but this is one we probably would
miss--it involves a substitution to a very different product.  The fact
that the switch is involuntary would also not be picked up.  I am cc'ing
our telephone analyst for a possibly more definitive opinion.

This is important in that it is one way that the CPI understates
inflation.  Remember that we are correcting biases toward overstatement
as rapidly as we can, with the effect that COLAs and social security
payments are lower than they would have been otherwise.  If we don't
also fix the understatements we will end up biasing the index downward.

Dave

> ----------
> Sent: 	Tuesday, July 07, 1998 11:00 AM
> To: 	pen-l@xxxxxxxxxxxxxxxxxxx
> Subject: 	[PEN-L:135] phones
>
> June Z. writes: >I am convinced that public telephones will soon be
> gone or
> left unfixed as more people have cell phones, so that one will have
> not
> much choice about buying one. <
>
> recently, when my car broke down, I used a pay phone to call home. It
> turned out that the GT&E phone _wouldn't accept coins_!!!!  WOULDN'T
> ACCEPT
> COINS. Since I didn't have a GT&E calling card, I used my Mastercard
> to pay
> for the call. Later, I received a charge on my MC account for 43
> cents, a
> full 8 cents (more than 22%) above the current normal price. This is
> outrageous. It's the only time in years and years and years that I've
> considered vandalism. Luckily the call to the auto club was free.
>
> Dave, how are such things registered in the CPI?
>
> in pen-l solidarity,
>
> Jim Devine jdevine@xxxxxxxxxxxxxxx &
> http://clawww.lmu.edu/Departments/ECON/jdevine.html
> "A society is rich when material goods, including capital, are cheap,
> and
> human beings dear."  -- R.H. Tawney.
>