1. Department of Economics , Southern Methodist University , Dallas , TX , 75275;2. Texas A&3. M University , College Station , TX , 77840;4. Department of Economics , Southern Methodist University , Dallas , TX , 75275
Abstract:
This article examines the sensitivity of the cost of living to some aspects of price changes and income changes that cannot be detected by Laspeyres indexes like the CPI-U or CPI-W. Effects of price-induced and income-induced changes in consumers tastes on the cost of living in the United States from 1947 to 1981 are estimated and found to be generally substantial.