Frequently Asked Questions

• Q: What is this?
  

  A: Short -- Custom CPIs (consumer price indexes) that are based on varying baskets of goods instead of a single, fixed basket.

  Long -- The government publishes a CPI that is intended to reveal how much prices have changed. However, prices for individual goods move independently (e.g. gas can be up 20% while computers are down 10%). To calculate a single CPI number, the government assumes the spending patterns of an average consumer.

  However, spending patterns can differ significantly. This site uses price data for individual items and consumer spending data to help you discover: 1) the varying impact of price changes on different demographic groups, and 2) the impact of price changes on you, given your particular spending pattern.

• Q: How do I read the "stair stacked" category graph?
  

  A: Each demographic group on the horizontal axis has a bar group consisting of two adjacent vertical stacked bars -- a stack of red bar segments on the left and a stack of green bar segments on the right.

  Each individual red or green bar segment represents an individual item (red items have declined in price and green have increased). Each has the following attributes:

  • Segment height is the item's contirbution to the group's price index change
  • Segment color is the change in price of the item (red for a decrease, green for a decrease, darker color indicates bigger change)
  • The cumulative sum of the red and green bar segments in a group -- the highest point of the green (right-hand) bar stack -- is the total cumulative price change for the group.

  The point of this graph is to show how price changes have resulted in changes in spending across the category's subgroups. The stacked stair visualization was designed to meet two goals: 1) show the relative differences between spending changes in the groups, and 2) show how individual items' price changes have contributed to those differences.

• Q: The price change for the "All consumers average" isn't the same as BLS' published CPI change for the same period, what gives?
  

  A: The all consumers average price change is calculated across the same 19 spending items as the individual custom price indexes. Those spending items comprise the vast majority of, but not all, consumer spending.

  Further, the price indexes on this site assume each item consumes a constant share of spending, whereas the BLS' CPI (much more intelligently) assumes a constant quantity of purchasing for each item. For example if you spend 10% of your income on $2 gas, this site assumes you will continue to spend 10% of your income on $1 or $4 gas, whereas the CPI assumes you will spend just 5% of your income on gas if it drops to $1 or 20% if it increases to $4.

• Q: The weights on "my cpi" add to up to less / more than 100. What's happening?
  A: The weights are treated as relative weights, not necessarily percentages. This works well for both primary envisioned uses of that calculator:
  
  • Manually entered weights -- could be difficult to compose with a sum of 100, but may be easier to specify as relative weights.
  • Average spending share weights -- generally add up to sums near 90%, are treated as if they comprise the entirety of consumer spending.
  Note, in the latter case, that if a single item has an unusually large price change, this technique exaggerates the effect of that change.
• Q: How is the CEX matched to the CPI?
  A: This site matches the CEX to the CPI precisely as described in Table A of:
  Hobijn, Bart and Lagakos, David, Inflation Inequality in the United States(October 2003). FRB Staff Report No. 173. Available at SSRN: http://ssrn.com/abstract=892577