Indexing government programs for changes in the cost of living

This article presents social cost-of-living indexes constructed from an eco nometric model of aggregate consumer behavior. The econometric price index has the same average inflation rate as a Tornqvist price index over the per iod 1947-1995 but rises less rapidly after 1973. Group cost-of-living index es are presented for white and nonwhite, male- and female-headed, and elder ly and nonelderly households. Elderly households have experienced a slightl y higher rate of inflation than the nonelderly since 1980. We recommend ind exing government programs, such as Social Security, by social and group cos t-of-living indexes rather that the Consumer Price Index.