Cost of living scardamalia sdc
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Transcript of Cost of living scardamalia sdc
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Cost of Living & Inflation Measures
Robert ScardamaliaRLS Demographics, Inc.
with regards to Michael Lavin
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Overview
• Inflation measures vs. Geographic Cost of Living Comparisons
• Their purpose• Who collects/produces them?• How are they produced?• How to obtain the data
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Link from Wikipedia
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www.missourieconomy.org/indicators/cost_of_living/index.stm
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www.missourieconomy.org/indicators/cost_of_living/index.stm
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Inflation Measures
Purpose
• To compare changes in prices over time • Need to distinguish between:– “price index” like the CPI versus – “cost of living”
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Uses of Inflation Data• Fiscal and monetary policy• Cost of Living Adjustments (COLA)– Collective bargaining agreements– Government programs (SS, food stamps)– Contracts (leases, etc.)– Standardized tax deduction
• Poverty Threshold Adjustments• Website calculators
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Consumer Price Index
• Produced by BLS• Measures prices for a specific market
basket of goods and services in a SPECIFIC GEOGRAPHIC AREA OVER TIME as an index relative to a base period
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CPI Market Basket
• Based on purchases by average consumer– Urban Wage Earners & Clerical Workers (32% of
U.S. households)– All Urban Consumers (87%)
• Designed from Consumer Expenditure Survey
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Consumer Expenditure Survey
• Conducted by Census Bureau for BLS• Diary Survey– Frequently purchased items– 2 consecutive 1-week periods
• Interview Survey– Large expenditures– Quarterly interview for 5 quarters
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Data Collection
• Outlet selection– telephone survey of consumers on where they
buy goods within category
• Item selection– 305 entry level items (peanut butter)– Specific item • JIF, crunchy, 25 oz. glass jar• Price collected on specific item
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Limitations
• Quality changes (e.g. generic drugs)• Replacement items (New chained index)• Population subgroups (elderly, poor)• Excludes taxes, • Excludes “free” public goods• Understates homeowner costs• Geographic areas covered
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Indexes Available• Index series (who’s included)
– All Urban Consumers (CPI-U)– Urban Wage Earners and Clerical Workers (CPI-W) – Chained All Urban Consumers (C-CPI-U)• Starts in January 2000
– Same items included, but different weights• Base periods
– All indexes relative to this number– 1982-84 (average prices) = 100– 1967 = 100
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Geographic Areas
• U.S. City Average• Census Regions• Metro Areas– 3 monthly metros– 11 bimonthly– 6 semi-annual
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Other Inflation Measures
• Implicit Price Deflator of GDP– Combines consumer, gov’t., business– Weights based on proportion of GDP
• Employment Cost index
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When You Need Location Comparisons• ACCRA (C2ER) Cost of Living Index– Average of all locations = 100
• Market Basket– “How do urban areas compare in the cost of
maintaining a standard of living appropriate for moderately affluent professional & managerial households”
– Very Specific Items (grocery, housing, utilities, health care, transportation, misc goods and services)• T-bone steak, eggs, potatoes, rent, tire balancing, dental visit
• Compiled and published quarterly– $75 per issue (PDF)– $150 per year (PDF - 4 quarters)
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ACCRA Cost of Living Index – Cont’d• Data Collection– Chambers of Commerce and others– Establishments where mid-level managers, etc.
would shop• Geographic Coverage– About 340 Urban Areas– Exact coverage varies by quarter– Based on who collects data
• Data Reported– Index (by sector)– Average Prices
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ACCRA New York Locations
Albany NY Brooklyn NYBinghamton NY Manhattan NYBuffalo NY Queens NYGlens Falls NY Plattsburgh NYIthaca NY Dutchess County NYNassau County NY Rochester NY
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• ACCRA COLI Methodologywww.coli.org/method.asp
• COLI Manualwww.coli.org/surveyforms/colimanual.pdf
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ERI Cost of Living Analysis
• Compiled by Economic Research Institute (subsidiary of Baker Thomsen Associates)
• Based on cities, not Metro Areas• Utilizes 4 different income levels• Annual compilation• Multiple data sources– Published data– Proprietary employer surveys– Surveys of national retail chains
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ERI Cost of Living Analysis
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HUD Fair Market Rents
• National coverage– Metropolitan Areas– Nonmetropolitan counties
• Represents lower income expenses• 3 methodologies used
– American Housing Survey– Decennial Census– Random Digit Dialing Telephone Surveys
• Updating older data with CPI• Will most likely switch to ACS data
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Other Inter-City Comparisons
• Sperling’s Best Places• Free Web Resources– HomeFair (Nat. Assn. Realtors)– Salary.com
• Specialized SourcesBOMA, AAA, etc.
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Which Source Is Best?
• ACCRA is best-known, most widely cited• Beware of sources where methodology is
undocumented