substitution bias

The Boskin Commission named this the single largest source of upward bias in the US CPI in 1996. If cabbage gets expensive and households buy radish instead, a fixed basket still charges the full cabbage increase to the index. The finding mattered because Social Security raises and tax brackets were tied to the CPI.

Predictions & track record (1)

• Awaiting grading The Fed swapped its inflation yardstick from CPI to PCE, and accuracy was not the only reasonScore on the July PCE released in late August: a return to a positive month-over-month reading counts as a one month energy effect, while a second straight decline or core PCE below 3.1% counts as a trend.

1 related posts

• Watch The Fed swapped its inflation yardstick from CPI to PCE, and accuracy was not the only reason 메르 (ranto28) · 2026-07-31