MEASURING THE COST OF LIVING 13
determined to be necessary for a balanced consumption!
The importance of each item in total consumption is a
“weight” and the cost of living is a “weighted” total, mean-
ing that the cost of each of the numerous goods and services
entering into the cost of living has been given a value in the
total cost equal to its importance in the total average or
representative consumption. Differences in the cost of living
from the standpoint of the retail price level, from place to
place and from time to time, may be ascertained by collecting
retail prices of the goods and services listed in the budget,
combining them with their consumption weights and com-
paring the total from one place or from one period to another.
Studying the cost of living from the point of view of the
price level is of interest as affording a quite different series
of comparisons from that afforded by an analysis of expendi-
tures. The price level study shows the cost of obtaining
the goods and services required for a balanced consumption
at any given time or place or among any specified group, and
may cover the requirements for any specified standard of
living. These costs, if taken on the same basis, may be com-
pared from time to time in the same place or at the same
time, from place to place.
Tut TECHNIQUE OF MEASUREMENT
Interest in the cost of living within the past ten years has
depended largely on the necessity for wages and salaries to
prices of the things which wages and salaries buy. It hasbeen
concerned primarily with the establishment of the minimum
cost of living, and with differences in the average cost of main-
taining any given standard of living, both from time to time and
from place to place, on the basis of changes in the price level
and not of expenditures. The technique of measurement has
developed, therefore, along two lines. The first is designed
to establish the actual cost of maintaining a specified stan-
dard of living, usually designated as the minimum; and
the second, to determine how average costs differ from time
to time and from place to place.
11n practice, consumption weights are frequently based on relative expenditures
for Sopra items in the total, rather than the actual quantities consumed, since
data for the former are far more readily obtained than for the latter.