The Cost of Living in America: A Political History of Economic Statistics, 1880–2000 (review)

Battered by the recent recession and a shrinking endowment, administrators at Wake Forest University announced at a faculty meeting last spring that pay hikes would be meager. A disgruntled voice asked, “Won’t we even get a cost of living raise?” The pedantic economist in me resisted the urge to rise and explain that since the Consumer Price Index (cpi) had fallen (ever so slightly) over the preceding year, faculty members should be thankful that they did not receive a “cost of living” decrease. This episode underlines the abiding necessity of measuring the “cost of living” and the inescapable sensitivity and debates about such measures.

Because estimates of changes in the cost of living—and the very concept itself—are so politically provocative, politicians and policymakers have generally searched for ways to diffuse the issue. Stapleford views their logic as part of a broader process of attempting “to ‘rationalize’ governance by restricting action to allegedly reasonable rules that are grounded in objective, empirical knowledge” (5). But the trouble is that rationalization “cannot deliver what it promises: an apolitical, neutral form of knowledge and governance,” because measures like the inflation rate are “rife with ambiguities,” which “become recognizable when one seeks to translate the concepts into operational terms” (8). Judgments with “political valences extend all the way through the calculation process” (9).

Stapleford makes this case ably by recounting the evolution of cost-of- living indexes in the United States from the late 1800s to the present—intertwining sweeping changes in the uses of these indexes with developments in statistical and economic theory and practice. He evinces the requisite ability to understand technical arguments laid out in economics treatises, as well as a careful examination of the archives, especially those of the Bureau of Labor Statistics (bls), and a subtle understanding of how the politics of these statistics played out.

The “cold,” “quiet,” and “unlovely” numbers first collected by state and federal government statisticians like Carroll Wright initially did not matter much, but when they were given an important role by bureaucrats setting wages during World War I, the lesson was relearned that “economic statistics rarely ended political debate—they proved at once too flexible (open to multiple interpretations) and too unstable (open to direct challenge through methodological critiques or indirect challenge through the citation of competing and conflicting figures)” (45). Accordingly, the book’s most interesting sections recount episodes in which cost of living estimates became political footballs—especially during World War II when the cio and afl labeled one bls cost of living report “the most insulting document to organized labor that has emanated from the Department of Labor since its creation” (186).

The cumulative impact of Stapleford’s historical analysis is to explain why recent attempts to overhaul the cpi—which most economists believe overstates the underlying inflation rate—have had such a meager impact. Unfortunately, in the concluding chapters his sympathy for critics of the bls breaks down to some extent. In addition, the analysis virtually ignores one highly important consumer of cost of living statistics— the Federal Reserve.