The Economic Theory of Cost of Living Index Numbers

The Economic Theory of Cost of Living Index Numbers

The Economic Theory of Cost of Living Index Numbers

The Economic Theory of Cost of Living Index Numbers

Excerpt

Perhaps in the social sciences more than in other fields of learning there is the ever-present danger of a schism between theory and practice -- a dichotomy of ideas governing the activities of practitioners on the one hand and the intellectual models of the academicians on the other. The development of such situations -- at least temporarily -- is no doubt to be expected in any branch of study. But when the lack of intercommunication persists for long there arises the probability of both serious error in practice and unrelieved stagnation in theory. In the study of cost of living index numbers it appeared to me that a situation of this kind was perilously close at hand. My conviction was strengthened by experience during the war and immediate postwar period when I served as an economist in the U. S. Department of Labor and later the U. S. Department of Commerce, while at the same time teaching graduate classes at American University. Circumstances in this period high-lighted the gap between theory and practice -- a gap which it is hoped this study will help to close.

To acknowledge one's intellectual debts is a pleasant duty, though likely to be interminable if completeness is required. References in the body of this work fulfill a part of this task. Special acknowledgment may be made here, however, of the more imposing -- and more recent -- of these obligations.

My serious interest in problems of economic measurement was first stimulated in the seminars of Professors Frederick C. Mills and Wesley C. Mitchell at Columbia University. The keen insights and critical comments of Professor Mills, who read the typescript of this study, and of Professor William Vickrey of Columbia, have done much to improve its clarity and significance. Professors Arthur F. Burns and Leo Wolman of Columbia also read the manuscript and provided numerous helpful suggestions. In Chapter 2, in which I found it necessary to touch upon the philosophical foundations of the approach to index number construction, the advice of Professor Sidney Hook of New York University proved an invaluable guide. It must, of course, be noted that whatever deficiencies remain in this work are the sole responsibility of the author.

M. J. U.

WASHINGTON, JUNE 1948.

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