73-407: The Federal Election Campaign Act of 1971 ( FECA , Pub. L. 92–225 , 86 Stat. 3 , enacted February 7, 1972 , 52 U.S.C. § 30101 et seq. ) is the primary United States federal law regulating political campaign fundraising and spending . The law originally focused on creating limits for campaign spending on communication media, adding additional penalties to
146-673: A slip law and in the United States Statutes at Large after receiving the act. Thereafter, the changes are published in the United States Code . Through the process of judicial review , an act of Congress that violates the Constitution may be declared unconstitutional by the courts. A judicial declaration that an act of Congress is unconstitutional does not remove the act from the Statutes at Large or
219-956: A ban of corporate contributions for political purposes. In response, the United States Congress passed the Tillman Act of 1907 , which banned the corporate contributions. Further regulation followed in the Federal Corrupt Practices Act enacted in 1910, and subsequent amendments in 1910 and 1925, the Hatch Act , the Smith–Connally Act of 1943, and the Taft–Hartley Act in 1947. These acts sought to regulate corporate and union spending in campaigns for federal office, and mandated public disclosure of campaign donors. In 1970, President Nixon vetoed
292-520: A cap on the amount a candidate could spend of their own money on their campaign at $ 50,000 for Presidential and Vice Presidential candidates, $ 35,000 for Senate candidates, and $ 25,000 for candidates for the House of Representatives. Violations of the policies outlined in the Act carried fines of up to $ 1,000 and up to one year of imprisonment, or both. The Act required candidates for federal office to disclose
365-408: A component of a consumer price index. Opportunity cost can be looked at in two ways, since there are two alternatives to continuing to live in an owner-occupied dwelling. One, supposing that it is one year's cost that is to be considered, is to sell it, earn interest on the owner's capital thus released, and buy it back a year later, making an allowance for its physical depreciation. This can be called
438-500: A constant standard of living . Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon. Nevertheless, in some countries, notably the United States and Sweden, the philosophy of the index is that it is inspired by and approximates the notion of a true cost of living (constant utility) index, whereas in most of Europe it is regarded more pragmatically. The coverage of
511-406: A consumer price index has been, and remains, a subject of heated controversy in many countries. Various approaches have been considered, each with their advantages and disadvantages. Leaving aside the quality of public services, the environment, crime, and so forth, and regarding the standard of living as a function of the level and composition of individuals' consumption, this standard depends upon
584-467: A few countries use the debt profile method, but in doing so, most of them behave inconsistently. Consistency would require that the index also cover the interest on consumer credit instead of the whole price paid for the products bought on credit if it covers mortgage interest payments. Products bought on credit would then be treated in the same way as owner-occupied dwellings. Variants of the debt profile method are employed or have been proposed. One example
657-763: A higher, more aggregated level (e.g. clothing) and weighted averages of the latter provide yet more aggregated sub-indices (e.g. Clothing and Footwear). Some of the elementary aggregate indices and some of the sub-indices can be defined simply in terms of the types of goods and/or services they cover. In the case of such products as newspapers in some countries and postal services, which have nationally uniform prices. But where price movements do differ or might differ between regions or between outlet types, separate regional and/or outlet-type elementary aggregates are ideally required for each detailed category of goods and services, each with its own weight. An example might be an elementary aggregate for sliced bread sold in supermarkets in
730-445: A reference period will stand at more than 100 if house prices or, in the case of a fixed-interest mortgage, interest rates rose between 2006 and 2007. The application of this principle in the owner-occupied dwellings component of a consumer price index is known as the "debt profile" method. It means that the current movement of the index will reflect past changes in dwelling prices and interest rates. Some people regard this as odd. Quite
803-508: A substantial increase in soft money contributions and expenditures in elections. This in turn led to passage of the Bipartisan Campaign Reform Act of 2002 ("BCRA"), effective on January 1, 2003, which banned soft money expenditure by parties. Some of the legal limits on giving of "hard money" were also changed by BCRA. As early as 1905, Theodore Roosevelt argued in favor of campaign finance reform and called for
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#1732773215157876-406: A three-year average in recognition of the fact that household survey estimates are of poor quality. In some cases, some of the data sources used may not be available annually, in which case some of the weights for lower-level aggregates within higher-level aggregates are based on older data than the higher level weights. Infrequent reweighing saves costs for the national statistical office but delays
949-426: Is a statute enacted by the United States Congress . Acts may apply only to individual entities (called private laws ), or to the general public ( public laws ). For a bill to become an act, the text must pass through both houses with a majority, then be either signed into law by the president of the United States , be left unsigned for ten days (excluding Sundays) while Congress remains in session, or, if vetoed by
1022-637: Is calculated and reported on a per region or country basis on a monthly and annual basis. International organizations like the Organisation for Economic Co-operation and Development (OECD) report statistical figures like the consumer price index for many of its member countries. In the US the CPI is usually reported by the Bureau of Labor Statistics . An English economist by the name of Joseph Lowe first proposed
1095-469: Is calculated by using a representative basket of goods and services. The basket is updated periodically to reflect changes in consumer spending habits. The prices of the goods and services in the basket are collected monthly from a sample of retail and service establishments. The prices are then adjusted for changes in quality or features. Changes in the CPI can be used to track inflation over time and to compare inflation rates between different countries. While
1168-416: Is involved, consider a consumer price index computed with reference to 2009 for just one sole consumer who bought her house in 2006, financing half of this sum by raising a mortgage. The problem is to compare how much interest such a consumer would now be paying with the interest that was paid in 2009. Since the aim is to compare like with like, that requires an estimate of how much interest would be paid now in
1241-580: Is made by the third method, the presiding officer of the house that last reconsidered the act promulgates it. Under the United States Constitution , if the president does not return a bill or resolution to Congress with objections before the time limit expires, then the bill automatically becomes an act; however, if the Congress is adjourned at the end of this period, then the bill dies and cannot be reconsidered (see pocket veto ). If
1314-410: Is sometimes used in informal speech to indicate something for which getting permission is burdensome. For example, "It takes an act of Congress to get a building permit in this town." An act adopted by simple majorities in both houses of Congress is promulgated , or given the force of law, in one of the following ways: The president promulgates acts of Congress made by the first two methods. If an act
1387-405: Is that purchases of new dwellings are treated as "investment" in the system of national accounts and should not enter a consumption price index. It is said that this is more than just a matter of terminological uniformity. For example, it may be thought to help understand and facilitate economic analysis if what is included under the heading "consumption" is the same in the consumer price index and in
1460-453: Is to be compared with the movement of the consumer price index, incomes must be expressed as money income plus this imaginary consumption value. That is logical, but it may not be what users of the index want. Although the argument has been expressed in connection with owner-occupied dwellings, the logic applies equally to all durable consumer goods and services. Furniture, carpets, and domestic appliances are not used up soon after purchase in
1533-463: Is to include down payments as well as interest. Another is to correct nominal mortgage rates for changes in dwelling prices or for changes in the rest of the consumer price index to obtain a "real" rate of interest. Also, other methods may be used alongside the debt profile method. Thus, several countries include a purely notional cost of depreciation as an additional index component, applying an arbitrarily estimated, or rather guessed, depreciation rate to
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#17327732151571606-433: Is unavailable, so indices are computed using an unweighted arithmetic or geometric mean of the prices of the sampled products. (However, the growing use of barcode scanner data is gradually making weighting information available even at the most detailed level.) These indices compare prices each month with prices in the price-reference month. The weights used to combine them into the higher-level aggregates and then into
1679-526: The w e i g h t i {\displaystyle \mathrm {weight} _{i}} terms do not necessarily sum to 1 or 100. By convention, weights are fractions or ratios summing to one, as percentages summing to 100 or as per mile numbers summing to 1000. On the European Union's Harmonized Index of Consumer Prices (HICP), for example, each country computes some 80 prescribed sub-indices, their weighted average constituting
1752-483: The "alternative cost" approach. The other, the "rental equivalent" approach, is to let it to someone else for the year, in which case the cost is the rent that could be obtained for it. There are practical problems in implementing either of these economists' approaches. Thus, with the alternative cost approach, if house prices are rising fast, the cost can be negative and then become sharply positive once house prices start to fall, so such an index would be very volatile. On
1825-538: The 60 days leading up to a general election. Despite several debates on the issue, the Act did not repeal Section 315 of the Communications Act of 1934 , a requirement that media companies offer equal broadcast time to candidates for federal office. Promises of rewards or gifts were prohibited under FECA, meaning that a candidate for office could not offer employment or other benefits in exchange for donations or other forms of political aid. The Act also placed
1898-772: The Act outlawed making contributions in the name of another person or knowingly accepting contributions that are being made in the name of another person. Reports were to be sent to the Comptroller General of the Government Accountability Office for Presidential elections, the Secretary of the Senate for Senatorial elections, and the Clerk of the House for House of Representatives elections. Candidates were also required to report finances to
1971-544: The Act passed the Senate floor on August 5, 1971 by a vote of 88-2. In the House, the Act passed on November 30, 1971 by a vote of 372–23. Because the House version was not identical to the Senate version, a conference committee was called. On December 14, 1971, the Senate agreed to the conference report, and on January 19, 1972, the House agreed to the conference report, sending the bill to President Nixon. The Act limited campaign expenditures for broadcast media, newspaper advertisement, and telephone calls to $ 0.10 per voter in
2044-1276: The CPI can be performed as CPI = updated cost base period cost × 100 {\displaystyle {\text{CPI}}={\frac {\text{updated cost}}{\text{base period cost}}}\times 100} . The "updated cost" (i.e. the price of an item at a given year, e.g.: the price of bread today) is divided by that of the initial year (the price of bread in 1970), then multiplied by one hundred. Many but not all price indices are weighted averages using weights that sum to 1 or 100. Example: The prices of 85,000 items from 22,000 stores, and 35,000 rental units are added together and averaged. They are weighted this way: housing 41.4%; food and beverages 17.4%; transport 17.0%; medical care 6.9%; apparel 6.0%; entertainment 4.4%; other 6.9%. Taxes (43%) are not included in CPI computation. C P I = ∑ i = 1 n C P I i × w e i g h t i ∑ i = 1 n w e i g h t i {\displaystyle \mathrm {CPI} ={\frac {\sum _{i=1}^{n}\mathrm {CPI} _{i}\times \mathrm {weight} _{i}}{\sum _{i=1}^{n}\mathrm {weight} _{i}}}} where
2117-417: The CPI is not a perfect measure of inflation or the cost of living , it is a useful tool for tracking these economic indicators. A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indices and sub-sub-indices can be computed for different categories and sub-categories of goods and services, which are combined to produce
2190-567: The CPI is one of the most closely watched national economic statistics. The index is usually computed monthly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, shoes, and clothing, each of which is, in turn, a weighted average of sub-sub-indices. At the most detailed level, the elementary aggregate level (for example, men's shirts sold in department stores in San Francisco), detailed weighting information
2263-471: The Northern region. Most elementary aggregate indices are necessarily 'unweighted' averages for the sample of products within the sampled outlets. However, in cases where it is possible to select the sample of outlets from which prices are collected so as to reflect the shares of sales to consumers of the different outlet types covered, self-weighted elementary aggregate indices may be computed. Similarly, if
Federal Election Campaign Act - Misplaced Pages Continue
2336-512: The Political Broadcast Act of 1970, a bill that aimed to establish laws regulating campaign spending on television and radio. President Nixon claimed that the Political Broadcast Act did not sufficiently limit campaign expenditures, noting that it "plugged only one hole in a sieve." This bill was an attempt to regulate election spending, but despite having the necessary membership to override the veto, Senate Democrats did not pass
2409-596: The Secretary of State's office in the state they are running for elected office in. Following the 1972 Presidential election, Congress amended the FECA in 1974 to set limits on contributions by individuals, political parties and PACs. The 1974 amendments also established an independent agency, the Federal Election Commission (FEC) to enforce the law, facilitate disclosure and administer the public funding program. The FEC commenced in 1975 and administered
2482-679: The Supreme Court on constitutional grounds in Federal Election Commission v. Wisconsin Right to Life, Inc. (2007), Davis v. Federal Election Commission (2008) and Citizens United v. Federal Election Commission (2010). The Citizens United ruling also struck down FECA's complete ban on corporate and union independent spending, originally passed as part of the Taft–Hartley Act in 1947. Act of Congress#Public law, private law, designation An act of Congress
2555-541: The United States Code; rather, it prevents the act from being enforced. However, the act as published in annotated codes and legal databases is marked with annotations indicating that it is no longer good law. Consumer price index A consumer price index ( CPI ) is a price index , the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time. The CPI
2628-434: The amount and range of goods and services they consume. These include the service provided by rented accommodation, which can readily be priced, and the similar services yielded by a flat or house owned by the consumer who occupies it. Its cost to a consumer is, according to the economic way of thinking, an " opportunity cost ," namely what he or she sacrifices by living in it. This cost, according to many economists, should form
2701-432: The base year, often differs both from the weight-reference period and the price-reference period. This is just a matter of rescaling the whole time series to make the value for the index reference period equal to 100. Annually revised weights are a desirable but expensive feature of an index; the older the weights, the greater the divergence between the current expenditure pattern and that of the weight reference period. It
2774-572: The category of independent political expenditures subject to mandatory donor disclosure. Further amendments to the FECA were made in 1976 to conform the law with the ruling in Buckley v. Valeo . Major amendments were also made in 1979 to streamline the disclosure process and expand the role of political parties. In 2002, major revisions to the FECA were made by the Bipartisan Campaign Reform Act , more commonly referred to as "McCain–Feingold." However, major portions of McCain-Feingold were struck down by
2847-442: The classifications they use rarely correspond to COICOP categories. The increasingly widespread use of bar codes, scanners in shops has meant that detailed cash register printed receipts are provided by shops for an increasing share of retail purchases. This development makes possible improved Household Expenditure surveys, as Statistics Iceland has demonstrated. Survey respondents keeping a diary of their purchases need to record only
2920-658: The consumer basket, different price indices may be calculated for groups with various demographic characteristics. For example, consumer price indices calculated according to the weightings in the consumer basket of income groups may show significantly different trends. No firm rules can be suggested on this issue for the simple reason that the available statistical sources differ between countries. However, all countries conduct periodical household-expenditure surveys and all produce breakdowns of consumption expenditure in their national accounts . The expenditure classifications used there may however be different. In particular: Even with
2993-449: The criminal code for election law violations, and imposing disclosure requirements for federal political campaigns . The Act was signed into law by President Richard Nixon on February 7, 1972. In 1974, the act was amended to create the Federal Election Commission (FEC) and to further regulate campaign spending. The act was amended again in 1976, in response to the provisions ruled unconstitutional by Buckley v. Valeo , including
Federal Election Campaign Act - Misplaced Pages Continue
3066-408: The district they're running in when adjusted for inflation using the consumer price index . The Act also limited the amount campaigns could spend on broadcast media to 60% of their total campaign spending limitation. Additionally, the Act required broadcast and non-broadcast media to charge the lowest unit rate for advertisements for all candidates within the 45 days leading up to a primary election and
3139-421: The estimation of weights: use all the available information and accept that rough estimates are better than no estimates. Ideally, in computing an index, the weights would represent current annual expenditure patterns. In practice, they necessarily reflect past using the most recent data available or, if they are not of high quality, some average of the data for more than one previous year. Some countries have used
3212-444: The expenditures they made and contributions they received if those amounts totaled more than $ 100. Candidates were also required to disclose the structure and membership of their political committees if they intended to receive and spend more than $ 1,000 during a calendar year. Political committees were required to keep track of the name, occupation, address, and amount that any person contributes if that amount exceeded $ 10. Additionally,
3285-540: The first publicly funded presidential election in 1976. In 1976, the Supreme Court in Buckley v. Valeo struck down several key provisions of the 1974 amendments, including limits on spending by candidate campaigns, limits on the ability of citizens to spend money independently of a campaign, and limits on the amount of money a candidate could donate to his or her own campaign. The case also substantially narrowed
3358-498: The index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups, such as the very rich or the very poor, may be excluded. Savings and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance. The index reference period, usually called
3431-402: The index. An 'elementary aggregate' is a lowest-level component of expenditure: this has a weight, but the weights of each of its sub-components are usually lacking. Thus, for example: Weighted averages of elementary aggregate indices (e.g. for men's shirts, raincoats, women's dresses, etc.) make up low-level indices (e.g. outer garments). Weight averages of these, in turn, provide sub-indices at
3504-432: The individual price observations can all be weighted. This may be the case, for example, where all selling is in the hands of a single national organization which makes its data available to the index compilers. For most lower level indices, however, the weight will consist of the sum of the weights of a number of elementary aggregate indices, each weight corresponding to its fraction of the total annual expenditure covered by
3577-413: The introduction into the index of new types of expenditure. For example, subscriptions for Internet service entered index compilation with a considerable time lag in some countries, and account could be taken of digital camera prices between re-weightings only by including some digital cameras in the same elementary aggregate as film cameras. The way in which owner-occupied dwellings should be dealt with in
3650-652: The law without the President's signature. Subsequently, Senator Mike Mansfield introduced S. 382, later to be known as FECA, to the Senate on January 26, 1971 in the 92nd Congress . The Act was first introduced to the Senate Subcommittee on Communications of the Committee on Commerce on March 2, 1971 by Senator John Pastore . After passing the Senate Committee on Commerce by a vote of 18–0,
3723-401: The market shares of the different types of products represented by product types are known, even only approximately, the number of observed products to be priced for each of them can be made proportional to those shares. The outlet and regional dimensions noted above mean that the estimation of weights involves a lot more than just the breakdown of expenditure by types of goods and services, and
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#17327732151573796-551: The national HICP. The weights for these sub-indices will consist of the sum of the weights of a number of component lower level indices. The classification is according to use, developed in a national accounting context. This is not necessarily the kind of classification that is most appropriate for a consumer price index. Grouping together of substitutes or of products whose prices tend to move in parallel might be more suitable. For some of these lower-level indices detailed reweighing to make them be available, allowing computations where
3869-399: The national income and expenditure accounts. Since these accounts include the equivalent rental value of owner-occupied dwellings, the equivalent rental approach would have to be applied to the consumer price index too. But the national accounts do not apply it to other durables, so the argument demands consistency in one respect but accepts its rejection in another. The other argument is that
3942-570: The necessary adjustments, the national-account estimates and household-expenditure surveys usually diverge. The statistical sources required for regional and outlet-type breakdowns are usually weak. Only a large-sample Household Expenditure survey can provide a regional breakdown. Regional population data are sometimes used for this purpose, but need adjustment to allow for regional differences in living standards and consumption patterns. Statistics of retail sales and market research reports can provide information for estimating outlet-type breakdowns, but
4015-624: The number of separately weighted indices composing the overall index depends upon two factors: How the weights are calculated, and in how much detail, depends upon the availability of information and upon the scope of the index. In the UK the retail price index (RPI) does not relate to the whole of consumption, for the reference population is all private households with the exception of pensioner households that derive at least three-quarters of their total income from state pensions and benefits, and "high income households" whose total household income lies within
4088-402: The opportunity cost of the use of durables is impracticable. Another approach is to concentrate on spending. Everyone agrees that repairs and maintenance expenditures for owner-occupied dwellings should be covered by a consumer price index, but the spending approach would include mortgage interest too. This turns out to be quite complicated, both conceptually and in practice. To explain what
4161-420: The other hand, with the rental equivalent approach, there may be difficulty estimating the movement of rental values for types of property that are not actually rented. If one or other of these measures of the consumption of the services of owner-occupied dwellings is included in consumption, then it must be included in income too, for income equals consumption plus saving. This means that if the movement of incomes
4234-436: The overall index relate to the estimated expenditures during the preceding whole year of the consumers covered by the index on the products within its scope in the area covered. Thus, the index is a fixed-weight index but rarely a true Laspeyres index since the weight-reference period of a year and the price-reference period, usually a more recent single month, do not coincide. Ideally, all price revalidations are accepted, and
4307-511: The overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. It is one of several price indices calculated by most national statistical agencies. The annual percentage change in the CPI is used as a measure of inflation . A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages , salaries , and pensions ; to regulate prices; and to deflate monetary magnitudes to show changes in real values. In most countries,
4380-445: The president rejects a bill or resolution while the Congress is in session, a two-thirds vote of both houses of Congress is needed for reconsideration to be successful. Promulgation in the sense of publishing and proclaiming the law is accomplished by the president, or the relevant presiding officer in the case of an overridden veto, delivering the act to the archivist of the United States . The archivist provides for its publication as
4453-416: The president, receive a congressional override from 2 ⁄ 3 of both houses. In the United States, acts of Congress are designated as either public laws , relating to the general public, or private laws , relating to specific institutions or individuals. Since 1957, all Acts of Congress have been designated as "Public Law X–Y" or "Private Law X–Y", where X is the number of the Congress and Y refers to
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#17327732151574526-457: The prices of new dwellings should exclude that part reflecting the value of the land, since this is an irreproducible and permanent asset that cannot be said to be consumed. This would presumably mean deducting site value from the price of a dwelling, with site value being defined as the price the site would fetch at auction if the dwelling were not on it. How this is to be understood in the case of multiple dwellings remains unclear. The merits of
4599-413: The principle thus requires that the index for our one house owner reflect the movement of the prices of houses like hers from 2006 to 2007 and the change in interest rates. If she took out a fixed-interest mortgage, it is the change in interest rates from 2006 to 2007 that counts; if she took out a variable-interest mortgage, it is the change from 2009 to 2010 that counts. Thus, her current index with 1999 as
4672-408: The sequential order of the bill (when it was enacted). For example, P. L. 111–5 ( American Recovery and Reinvestment Act of 2009 ) was the fifth enacted public law of the 111th United States Congress . Public laws are also often abbreviated as Pub. L. No. X–Y. When the legislation of those two kinds are proposed, it is called public bill and private bill respectively. The word "act", as used in
4745-475: The structure of the FEC and the limits on campaign expenditures, and again in 1979 to allow parties to spend unlimited amounts of hard money on activities like increasing voter turnout and registration. In 1979, the FEC ruled that political parties could spend unregulated or "soft" money for non-federal administrative and party building activities. Later, this money was used for candidate-related issue ads, which led to
4818-488: The term "act of Congress", is a common, not a proper noun . The capitalization of the word "act" (especially when used standing alone to refer to an act mentioned earlier by its full name) is deprecated by some dictionaries and usage authorities. However, the Bluebook requires "Act" to be capitalized when referring to a specific legislative act. The United States Code capitalizes "act". The term "act of Congress"
4891-911: The theory of price basket index in 1822. His fixed basket approach was relatively simple as Lowe computed the price of a list of goods in period 0 and compared the price of that same basket of goods in period 1. Since his proposed theories however were elementary, later economists built on his ideas to form our modern definition. consumer price index = market basket of desired year market basket of base year × 100 {\displaystyle {\text{consumer price index}}={\frac {\text{market basket of desired year}}{\text{market basket of base year}}}\times {\text{100}}} or CPI 2 CPI 1 = price 2 price 1 {\displaystyle {\frac {{\text{CPI}}_{2}}{{\text{CPI}}_{1}}}={\frac {{\text{price}}_{2}}{{\text{price}}_{1}}}} Alternatively,
4964-436: The top four per cent of all households. The result is that it is difficult to use data sources relating to total consumption by all population groups. For products whose price movements can differ between regions and between different types of outlet: The situation in most countries comes somewhere between these two extremes. The point is to make the best use of whatever data are available. Due to differences in weightings in
5037-460: The total of purchases when itemized receipts were given to them and keep these receipts in a special pocket in the diary. These receipts provide not only a detailed breakdown of purchases but also the name of the outlet. Thus response burden is markedly reduced, accuracy is increased, product description is more specific and point of purchase data are obtained, facilitating the estimation of outlet-type weights. There are only two general principles for
5110-572: The value of the stock of owner-occupied dwellings. Finally, one country includes both mortgage interest and purchase prices in its index. The third approach simply treats the acquisition of owner-occupied dwellings in the same way as acquisitions of other durable products are treated. This means: Furthermore, expenditure on enlarging or reconstructing an owner-occupied dwelling would be covered, in addition to regular maintenance and repair. Two arguments of almost theological character are advanced in connection with this transactional approach. One argument
5183-519: The way that food is. Like dwellings, they yield a consumption service that can continue for years. Furthermore, since strict logic is to be adhered to, there are durable services as well that ought to be treated in the same way; the services consumers derive from appendectomies or crowned teeth continue for a long time. Since estimating values for these components of consumption has not been tackled, economic theorists are torn between their desire for intellectual consistency and their recognition that including
5256-462: The weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulas that would approximate this and that can be shown to approximate what economic theorists call a true cost-of-living index . Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain
5329-422: The year 2010 on a similar house bought and 50% mortgage-financed three years ago, in 2007. It does not require an estimate of how much that identical person is paying now on the actual house she bought in 2006, even though that is what personally concerns her now. A consumer price index compares how much it would cost now to do exactly what consumers did in the reference period with what it cost then. Application of
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