THE TRILLION-DOLLAR MAN
Michael Boskin is ready to pick up the
hood and fix the engine
By Kathleen OToole
month at a West Terre Haute, Indiana, appliance store, one shopper
will search for a particular answering machine; at a San Francisco area
hospital, another will check the price of a particular form of heart
surgery; in Kansas City, another will compare this months to last
months price for a first-run movie ticket. These three comparison
shoppers are among the 400 that every month fan out across the country
to check prices of thousands of products and services for the nations
consumer price index. It is a vast and in many ways impressive effort,
but one that Stanford economist Michael Boskin believes is flawed.
The lists of goods and services used for the index are relics, he
says, from the 1980s. Today people are beating the price of theaters by
renting videotapes and forgoing the cost of both the theater and the
babysitter. People who suffer heart attacks are often treated with
clot-dissolving drugs instead of surgery, and cellular phones, not
answering machines, are selling like hotcakes.
Boskin wants real shoppers habits to show up quicker in the nations
consumer price index (CPI), the official measure of inflation. That, he
says, will lower the nations official rate of inflation by 1.1 percent.
If things are not corrected soon, the overstatement compounds over time
and in just 12 years the federal debt will be one trillion dollars