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Several decades ago, the Austrian economist, Oskar Morgenstern, pointed out the dangers and absurdities of trying to reduce something as complex and ever-changing as the American economy to a single number such as is regularly done with measurements of changes in the Gross Domestic Product . This is equally true with popular measurements of changes in the cost of living, such as the Consumer Price Index (CPI).
For example, on May 14th the Bureau of Labor Statistics (BLS) released the CPI data for the month of April 2008. The news media focused on two numbers: the change in the overall CPI, which was 3.9 percent at an annual rate, and “core” inflation (the rate of change in the CPI minus food and energy prices), which was 2.3 percent.
Most people, however, sense that something is amiss when comparing these government-released numbers and what they experience every day in the marketplace. This is because reality is more complex than this attempt to reduce the world to a handful of statistically-derived numerical averages.
The CPI is meant to be a composite of what is regularly bought by the average American urban family. Based on consumer surveys, a “basket” of consumer items is constructed that also “weights” the items in the basket based on the relative amounts usually purchased.
Due to the costs of doing detailed consumer surveys and the desire to have an unchanging benchmark for comparison, this consumer basket is only significantly revised every ten years or so.
This means that over the intervening time it is assumed that consumers continue to buy the same goods and in the same relative amounts, even though in the real world new goods come on the market, other older goods are no longer sold, the quality of many goods are improved over the years, and changes in relative prices often result in people modifying their buying patterns.
The fact is there is no “average” American family. The individuals in each household (moms and dads, sons and daughters, and sometimes grandparents or aunts and uncles) all have their own unique tastes and preferences. This means that your household basket of goods is different in various ways from mine, and our respective baskets are different from everyone else's.
Some of us are avid book readers, and others just relax in front of the television. There are those who spend money on regularly going to live sports events, others go out every weekend to the movies and dinner, while some save their money for an exotic vacation. A sizable minority of Americans still smoke, while others are devoted to health foods and herbal remedies. Some of us are lucky to be “fit-as-a-fiddle,” while others unfortunately may have chronic illnesses. There are about 305 million people in the United States, and that’s how diverse are our tastes, circumstances and buying patterns.
This means that when there is price inflation, for example, those rising prices impact on each of us in different ways. (This is also partly due to the fact that during an inflationary period, prices do not all increase at the same time or to the same extent.)
The CPI data released by the BLS on May 14th included the following: 
Just for these two broad groups of people – “All Urban Consumers” and “Urban Wage Earners and Clerical Workers” – we see that prices rose at significantly different percentage amounts across these various categories of goods.
Each of these categories, in turn, has subcategories. For example, under “Education and Communication,” textbooks and school supplies rose over this period by 5.5 percent, while tuition, other school fees and childcare went up by 6.5 percent, even though the average rate of price increase for this category as a whole was estimated to have been only 3.2 or 2.8 percent, depending on which group of income-earners' "basket" of goods is calculated.
Also, there are regional differences. The annual rate of price inflation in Chicago, as measured by the CPI, was 4.5 percent; in Los Angeles/Orange County, 3.7 percent; in the greater New York area, 3.8 percent; in Detroit, 2.9 percent; and in San Francisco/Oakland/San Jose, 1.4 percent.
No wonder that the government’s official CPI inflation number often seems off-kilter to so many of us when we hear it in the news each month. Our individual consumer baskets are too diverse to match that imaginary American representative family. As individuals and households, we are just too complex to fit a “one-size-fits-all” statistical average. Related Commentaries How Did Your Cost of Living Change in 2007? COLA, "Elder Inflation," and Health Costs: In a Nutshell
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It seems that some organization could enlist Internet-consumers, perhaps by offsetting Internet-based costs and compensating for differing tax treatment. The resulting data could be aggregated rapidly to look for trends that the CPI can't catch, such as product substitution.