Modernizing the Consumer Price Index for the 21st Century (2022) / Chapter Skim
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1 Introduction
1 Introduction
Pages 15-24
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From page 15... ...
In 1917, a price collection effort of family expenditures in 92 industrial centers was begun to provide appropriate weighting patterns for 15 A00858 -- Consumer Price Index REV.indd 15 8/15/22 11:54 AM
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From page 16... ...
Rather, this report is about modernizing the price measurement data infrastructure within the context of this accepted framework. New data sources carry the potential to increase accuracy, detail, and timeliness (pos sibly reduce costs)
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From page 17... ...
Fortunately, at the same time, the digital revolution of recent decades has given rise to vast new alternative data sources that can be leveraged for the purpose of tracking consumer prices. These new data sources have the potential to improve the accuracy, coverage, and timeliness of the CPI.
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From page 18... ...
These methods of price sampling and establishing consumer expenditure shares were more appropriate and more effective in the 20th century than they are now. T oday, and even more so 5 to 10 years down the road, BLS will need to take advantage of alternative data sources for the CPI to keep up with measurement demands and to remain relevant.
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From page 19... ...
BLS suspended in-person collection in March 2020, leading to a rapid shift to online and telephone collection; this shift in data collection modes is illus trated in Figure 1-3. While alternative data sources will be useful for many aspects of the CPI, it also is important to acknowledge that it will be difficult to move away fully any time soon from systematic nationwide surveys that track consumer expenditure patterns.
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From page 20... ...
SOURCE: Panel-generated, using data from BEA and BLS. FIGURE FIGURE1-3 1-3 Shifts Shiftsin in pandemic pandemiceconomy data data economy collection modesmodes collection for the for commodities and the commodi services ties andprice survey.
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From page 21... ...
More broadly, BLS has a vital role to play in the changing data culture in economic statistics brought on by the increasing costs of surveys, reduced response rates, and emergence of data complements and substitutes, includ ing administrative and commercial data sources. The statistical system now finds itself at a promising moment to make headway on modernizing its statistical infrastructure, in part because of the Foundations for Evidence Based Policymaking Act of 2018 (Evidence Act)
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From page 22... ...
The panel will also propose solutions for some historically difficult-to-measure expenditure categories, particularly for which the availability of alternative data create opportunities for improved price measurement. The panel will consider opportunities to use new data sources to improve aggregation of the elementary item-area indexes and also to mitigate upper-level substitution bias in the CPI-U and the CPI-W -- for example, by taking advantage of the simultaneous availability of quantity and price information to update baskets and weights with shorter lags.
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The panel also reflected on how various data sources could il luminate price changes for products that experience rapid technological progress (quality change)
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