12 COST OF LIVING IN THE UNITED STATES
view of individual or family expenditure, may be measured
only by knowing how families actually spend their incomes
and what they get for them.! Changes in costs, where this is
used in the sense of expenditures, reflect together changes in
incomes, changes in living standards, and changes in prices.
The study of the cost of living, from the point of view of
expenditures, is seen to be largely sociological, shedding
light on the manner in which people live; how they spend
their incomes; how these expenditures differ among various
racial, occupational and economic groups; the effect of geo-
graphical location, of business prosperity or depression, and
of the size and composition of the family.2
Prices as A Measure oF THE Cost oF Living
The cost of living, from another point of view, may mean
a balanced combination of average retail prices. In deter-
mining the combination to be used, consumption by normal
families in a normal period may be taken as an indication of
the kind and quantity of articles ordinarily used. Or, for
families of any given economic or social status, these quanti-
ties may be arbitrarily assigned on the basis of scientific
tests of needs at a specified standard, such as calorie food
requirements, cubic content of housing, and the like? As
the basis for measuring changes in the cost of living, average
or normal standards rather than minimum are generally used.*
In either case, these goods and services are then priced
and prices are combined in accordance with the quantities
1Of course, both actual expenditures and changes in expenditures are usually
measured by an average of a number of individuals or families in order to present
a general picture.
2 For list and description of the more important American studies of family
expenditures, see Research Report No. 41, op. ¢iz., Chapters I and 11.
% As will appear later, the theoretical determination of clothing and sundries
requirements, even at a minimum standard, is as yet practically impossible. Con-
sumption data are available, however, from which to work out a fairly satisfactory
pragmatic basis. For requirements at a standard above the minimum, where there
1s more margin for the exercise of preference, selection of samples becomes of neces-
sity entirely a matter of judgment.
4 Certain index numbers of the cost of living in countries other than the United
States are based on minimum requirements. See, for example, the series constructed
by Kuczynski for Greater Berlin. R. R. Kuczynski: “ Post-War Labor Conditions in
Germany,” United States, Bureau of Labor, Bulletin No. 380, March, 1925, pp.
64-67. These are published regularly four times a month in Kuczynski's Finanz-
politische Korrespondenz. Berlin.
