Meditations and Learnings

Meditations and Learnings

Consumer Price Index Failings

National income can only ever be roughly estimated. The consumer price index attempts this by tracking the purchase of a collection of items. The index is biased because the items not included are luxury goods that decline in price, such as the highest-end televisions. However, items increasing in price over time, such as phones, are included, exaggerating inflation.
This upward bias of these measures means that real-income statistics are biased downward.