FACTOID # 2: Puerto Rico has roughly the same gross state product as Montana, Wyoming and North Dakota combined.
 
 Home   Encyclopedia   Statistics   States A-Z   Flags   Maps   FAQ   About 
   
 
WHAT'S NEW
 

SEARCH ALL

FACTS & STATISTICS    Advanced view

Search encyclopedia, statistics and forums:

 

 

(* = Graphable)

 

 


Encyclopedia > Cost of living index

A cost-of-living index measures differences in the price of goods and services over time. Price indexes, such as the U.S. Consumer Price Index, are examples of these indexes. Price indexes measure the cost of purchasing a bundle of goods and services.


If a cost-of-living index describes the welfare changes in terms of the percent of income necessary to leave the household indifferent, it provides a unit-free measure of the change in social welfare.


A Konüs index is a type of cost-of-living index that uses an expenditure function such as one used in assessing expected compensating variation. The expected indirect utility is equated in both periods. This method can be used to introduce risk aversion into cost-of-living indexes.


Indexes can be constructed to allow for substitutions to other items as prices change. These indexes seldom recognize changes in the quality of goods however.


A cost-of-living index is a useful way to consider welfare changes caused by changes in factors exogenous to the individual household, such as inflation, and the monetary, fiscal, and trade policies of governments.


Cost-of-living allowance (COLA)

Employment contracts, pension benefits, and government entitlements (such as social security) can be tied to a cost-of-living index, typically to the consumer price index. A cost-of-living allowance adjusts salaries based on changes in a cost-of-living index. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves. Cost-of-living allowance is often abbreviated "COLA" (whereas cost-of-living index is never abbreviated as "COLI").


External link


 
 

COMMENTARY     


Share your thoughts, questions and commentary here
Your name
Your comments

Want to know more?
Search encyclopedia, statistics and forums:

 


Press Releases |  Feeds | Contact
The Wikipedia article included on this page is licensed under the GFDL.
Images may be subject to relevant owners' copyright.
All other elements are (c) copyright NationMaster.com 2003-5. All Rights Reserved.
Usage implies agreement with terms, 1022, m