[PEN-L:141] Re: RE: phones

[Doug Henwood <dhenwood@xxxxxxxxx>]

Richardson_D wrote:

>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.

Doesn't anyone in the BLS care about this? All we hear about, even from the
BLS, are reasons for overstatement. Ex-BLS commish Janet Norwood gave
testimony to the Boskin Commission that listed reasons for understatement,
but that's about all I've heard. Did Newt's threats to zero out BLS funding
have their effect?

Doug