In what way does utility theory enter into the calculation of
the CPI? My understanding is that the issue is empirical: how
does the bundle of goods people consume change with price
changes.
Why do you need utility theory for this? Is it invoked just
for ritualist purposes ("hey, look we're economists!")?
Related to Mark Weisbrot's comments: is utility theory being
invoked say that consumer utility stays the same as they move
along a single utility curve as relative prices change? But utility
curves assume all other things remain equal during the period
of analysis. Do people as the BLS really believe that the
only thing changing between two years is the relative prices
of goods?
Does the BLS plan to report geometric mean price indexes
for years before 1990?
Eric
..
Eric Nilsson
Department of Economics
California State University
San Bernardino, CA 92407
[EMAIL PROTECTED]
