Assessing the Bias in the Consumer Price Index from Survey Data
Alan B. Krueger, Aaron Siskind
NBER Working Paper No. 6450
This paper compares self-reported changes in families' financial status to actual changes based on annual time-series data calculated from the PSID. The results indicate that the Consumer Price Index does a reasonably accurate job reconciling self-reported changes in financial status with measured changes in real income. Earlier work by Nordhaus (1998) reached a different conclusion because it did not account for changes in the shape of the income distribution.
Published: Monthly Labor Review, Vol. 121, no. 4 (April 1998): 24-33.