Editing Price Statistics Review Committee (Stigler Commission) (section)

== Long-Term Impact on Inflation Measurement and Policy ==

The Stigler Commission's work had enduring effects on U.S. inflation measurement:

{| class="wikitable"
|-
! Aspect !! Pre-Stigler (Pre-1961) !! Post-Stigler Influence
|-
| '''Conceptual Framework''' || Fixed-basket COGI, focused on goods prices. || Shift toward COLI, emphasizing utility and welfare; influenced BLS's 1978 revision and later Chained CPI (introduced 2002).
|-
| '''Sampling Methods''' || Judgmental, prone to bias. || Probability sampling adopted in 1964 (outlets) and fully in 1978, improving accuracy and credibility.
|-
| '''Quality Adjustments''' || Limited, ad hoc. || Hedonic methods trialed in 1978, expanded in 1990s (e.g., for computers, apparel).
|-
| '''Homeownership''' || Asset-price (purchase and interest). || Rental equivalence implemented in 1983, reducing upward bias.
|-
| '''Bias Mitigation''' || Ignored substitutions and new goods. || Gradual reductions in overstatement; paved way for Boskin Commission's 1.1% bias estimate and chained indexes.
|}

Policy-wise, the shift to COLI principles transformed the CPI from a neutral measurement tool into a subtle policy lever. By better accounting for substitutions and quality, the index tended to report lower inflation rates than a strict fixed-basket approach, which directly affected escalation clauses in contracts, wage adjustments, and federal programs. For example, Social Security benefits, military pensions, and parts of the income tax code are indexed to the CPI; lower measured inflation means smaller cost-of-living adjustments (COLAs), potentially saving the government billions annually in outlays while effectively transferring resources from beneficiaries to taxpayers. This aligns with the notion in Eric Weinstein's account of Jeffrey Epstein viewing the commission's refinements as turning inflation measurement into a "policy weapon," enabling trillions in fiscal transfers through understated COLAs over decades.

The commission's legacy extended beyond the U.S., influencing international price index standards, and it set a precedent for later reviews like the Boskin Commission (1996) and the National Research Council (2002), which built on its COLI advocacy while addressing remaining biases. Despite political sensitivities—e.g., labor unions' concerns over downward adjustments—the changes enhanced the CPI's economic rigor, though debates persist on whether it fully captures subgroup differences or modern issues like medical care costs.