Policy Implications of the Boskin Commission Report

The author supports the type of the back-of-the-envelope calculations of CPI bias that the Commission used so effectively to attract public attention to its report. In the area of quality adjustment, however, he criticizes the Boskin Commission for what he calls “premature extrapolation,” that is moving too quickly from a limited number of examples to a broad conclusion. He stresses the importance of high-quality data for policy decisions and observes that a better allocation of existing resources can improve economic statistics, suggesting that the creation of a unified statistical agency in the United States, like Statistics Canada, would streamline data collection and analysis. In terms of the issue of Social Security solvency, the author argues that use of the CPI to adjust social security benefits downward is not a preferred option. He concludes that the Commission should have advised Congress that it did not have an adequate scientific basis to recommend a specific quantitative adjustment to the CPI index used to adjust federal programs.