Michael Boskin

Michael Boskin is ready to “pick up the hood and fix the engine”

By Kathleen O’Toole

Next 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 month’s to last month’s 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 nation’s consumer price index. It is a vast and in many ways impressive effort, but one that Stanford economist Michael Boskin believes is flawed.

Michael BoskinMichael Boskin

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 nation’s consumer price index (CPI), the official measure of inflation. That, he says, will lower the nation’s 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 higher.

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