Food Cost Indexes for Low-Income Households and the General Population

by Noel Blisard, David Smallwood, and Steve M. Lutz

The results of this study indicate that the Consumer Price Index (CPI) has not systematically overestimated or underestimated the food costs incurred by the general population. True-cost-of-food indexes calculated for the general population tend to be the same as or slightly lower then the CPI except for 1994 and 1995. The true-cost indexes also indicate that there are economies to household size, that black households incur lower costs than nonblack households, and that the households in the West tend to have the highest costs. True-cost indexes for low-income households tend to be about the same as the CPI for one-person households, and lower than the CPI for two- and four-person households in all years. This is a significant finding in that components of the CPI for food at home are indirectly used to adjust benefit levels for food stamp recipients.

Keywords: true cost of living index, true cost of food at home, Engel curve, demand

In this publication...

• Entire Report
• Front Matter (Abstract, Table of Contents, Summary)
• Introduction
• Laspeyres and True-Cost-of-Food Indexes
• The Piglog Model
• The Tornqvist Index as a True-Cost Index
• Estimating the True-Cost Index of the Piglog Model
• Incorporating Demographics into the Model
• Data Sources and Descriptive Statistics
• Empirical Results
• References