Evening star. [volume] (Washington, D.C.) 1854-1972, 1953-02-20
NewLiving Cost Index
To Appear, Based on
Three-Year Study
By Rowland Evons. it,
Associated Press Staff Writer

ASsoCIoteo pTeSS StoIt WttIet
A brand new cost-of- living in
dex, computed after an exhaus-
tive three-year price and spend
ing survey across the Nation,
makes its first appearance next
week.
Evan Clague. commissioner of
the Labor Departments Bureau
of Labor Statistics. says the new
index, although not can exact
measurement" will be the most
comprehensive" in the past 20
years.
The consumers price index is
nothing more than a monthly
measurement of the change in
prices - with the accent on
"change"-of hundreds of goods
and services bought by moderate
income families who live in big
and small cities.
Taken all together, BIS calls
these 300 items, ranging from
cigarette to surgery, the market
basket" of goods and services
families of wage-earners and
clerical workers must buy to
maintain their level of living.
TV Sets in Budget.
The American people are con-
stantly changing their spending
habits. Ten years ago there
were virtually no television sets.
Today there are nearly 81 mil
lion. TV sets are now as much
a part of the average family's
budget as automobiles and
movies. Thus, TV sets will now
be included in the market bas-
ket," and their changing costs
will become part of the monthly
index.
Up to now, the cost-of- Living
index has been computed from
price changes in 225 items,
measured by. price sampling in
"a cities, all large. Besides ex-
panding the number of items to
800 by adding TV sets, frozen
foods and others, BIS will take
price samples in 46 cities and
towns, ranging in size from New
York to towns of $500.
The 300 items selected for
monthly price sampling were Sc
lected on the basis of a spend
ing survey, over the past three
years, during which buying
habits of wage earners were
studied in 81 towns and cities.
Specialists Survey Homes.
BIS sent pricing specialists
into the homes of typical fam
lilies in all these cities to get a
complete record of the kinds,
qualities and amounts of foods.
clothing, furniture and all other
goods and services bought in
1850, and how much was spent
for each item.
Results of this survey showed
that the average family spent
30.1 per cent of its total expen-
ditures for food 80 per cent for
housing, 81 per cent for clothes.
II per cent for transportation,
At per cent for medical care.
81 per cent for personal care
(Such as toilet articles. 54 per
cent on reading and recreation
(Which includes TV), and per
cent for "other goods and serv-
ices" tobacco and alcoholic bev-
erages. legal services. expenses.
etc.:
Ratios Decline.
Comparing this modern market
basket with the one in use up to
now shows interesting contrasts.
For example, the old coSt-o liv-
ing index gave a weight of 35.A
per cent to foods points or Is
per cent more than the new
value in the market basket.
Why? Because the spending
survey showed that expenditures
for food and housing now repre-
sent smaller portion of total
expenditures than they did in
1884, when the last spending
survey was made.
Housewives trained to follow
standard pricing procedures and
specifications assist BIS agents
in getting these monthly prices.
The specifications are written
with the help of manufacturers
and retailers who know the
articles. For instance, one of
the mems shirts regularly priced
has these specifications: At
tached collar, barrel cuffs, COT
ton broadcloth, white, combed
yarn, 136-by-60 or 128-by-168
thread count, and so on. This is
to guard against errors that
would creep into the index if
articles of slightly different styles
or types were compared for price
changes.
The new index will use average
prices in the period 1947 to 1949
as base of 100. The base is
arbitrary-it could be any period
at all. In fact. Mr.. Clague has
announced he will issue the new
index also on a 1935-1939 base
for at least the next IL months,
so easy comparisons can be made
between the new and old index.
The old index was tied to the
1935-1939 base.
BIS has announced six sepa-
rate times. starting in late 1850.
that its old index would be dis
continued at the end of 1852.
More than 3 million workers are
covered by contracts that tie
their wages to the old index.
Some of these contracts already
have been rewritten to fit the
new index. but many more have
not.