The Plutocratic Bias in the CPI - Evidence from Spain (Electronic book text)

In all countries, the official consumer price index (CPI), which is meant to be representative for a certain reference population, is a fixed-weight price index. At least since Kons (1924), economists have known that a fixed-weight CPI suffers from a "substitution bias" relative to a true cost-of-living index which, instead of maintaining constant the budget shares of the households represented in the index, maintains constant their living standards or welfare levels. But according to the review of the literature carried out by a United States Senate Commission headed by Michael Boskin (Boskin and others, 1996), this is not all that is wrong with the United States CPI elaborated by the Bureau of Labor Statistics (BLS).