Is the Time Price Index a cost of living index?
Yes. The TPI-US 25 measures the cost of a fixed basket of US consumer goods and services, denominated in hours of work rather than dollars. That is a cost-of-living measurement. The basket and base year are fixed, so changes in the index reflect changes in the affordability of that basket over time.
What does a falling TPI value mean?
The index is set to 100 in 1980. A current value of 27.8 means the basket takes 27.8% of its 1980 work-time price to acquire today. Equivalently, the same hour of work today buys 3.6 times as much of the basket as in 1980. A falling value indicates rising abundance; a rising value indicates falling abundance.
Why measure the cost of living in hours of work instead of dollars?
Dollars change in meaning over time. An hour of work does not. Measuring affordability in work time removes the need for an inflation deflator and ties the measurement directly to the budget constraint a worker actually faces. The unit, an hour of life, is constant across decades. The cost of this approach is one of scope: time prices say nothing about non-wage income, taxes, transfers, or non-market goods.
How is the Time Price Index different from the Consumer Price Index (CPI)?
CPI and TPI answer different questions.
CPI measures the dollar price of a representative basket of consumer goods and services and tracks how that dollar price changes over time. It is published monthly by the US Bureau of Labor Statistics. Its basket is reweighted periodically to reflect changing consumption patterns, and selected items use hedonic adjustments to hold quality constant.
TPI measures the work-time price of a fixed basket and tracks how that price changes over time. It is published annually. The basket is held constant for the life of a methodology version. The denominator is a wage series (AHETPI), not a price level.
CPI is the standard input to inflation measurement, cost-of-living adjustments, and real-dollar deflation. TPI is a distinct measurement that expresses affordability in units of work time. The two are not interchangeable, and one does not replace the other.
Does TPI replace CPI?
No. CPI answers a question about dollar prices. TPI answers a question about work-time prices. Use CPI to deflate nominal magnitudes or compare price levels in dollar terms. Use TPI to compare affordability across long time spans without choosing an inflation deflator.
Is TPI inflation-adjusted?
TPI is not adjusted by an inflation index. The wage denominator is itself a nominal series. Dividing a nominal price by a nominal wage yields work time, a unit independent of the price level. Adjusting either side of the ratio with a CPI or PCE deflator would be a different operation and produce a different number.
How does TPI handle the substitution and quality-change problems CPI handles via chain weighting and hedonic adjustment?
TPI does not solve them; it makes a different tradeoff. The basket is fixed, so consumers shifting away from a constituent does not change the index. For goods where direct prices for a constant-quality unit are not available across the full period — personal computers, mobile phones, televisions, vehicles — TPI uses BLS hedonic-adjusted CPI subindices applied to a 1980 reference price for a then-typical unit. These constituents are flagged on the constituents page.
Why 1980 as the base year?
1980 aligns with the base year of the Simon Abundance Index and supports cross-comparison with related work. It predates the consumer electronics revolution, which is the largest single source of time-price decline in the post-1980 period. It is also the earliest year for which every constituent in the basket has a documented primary-source price observation.
Why AHETPI as the wage denominator instead of median household income?
AHETPI is Average Hourly Earnings of Production and Nonsupervisory Employees, Total Private. It is published monthly back to January 1964, covers roughly 80% of US private-sector employment, and is reported in dollars per hour, which matches the unit the index needs. Median household income is annual, includes non-wage income, and would require an assumed hours-worked figure to convert to an hourly rate. AHETPI avoids that assumption.
How are new products handled if they did not exist in 1980?
They are not in the basket. The TPI-US 25 is a fixed-basket index priced from 1980 to present. Products and categories that did not exist in 1980 are out of scope by construction. A separate index covering post-1980 categories is a candidate for future work but is not blended into TPI-US 25.
How often is the basket rebalanced?
Never within a methodology version. The basket is fixed for the life of v1.0. A rebalance, if it occurs, increments the methodology version and is documented in the changelog with the reason and the effective year.
Where does the data come from?
All constituent prices come from public primary sources: BLS Average Price Data, BLS CPI subindices, FRED, the US Census Bureau, USPS, NCES, and others documented per-constituent on the constituents page. The wage denominator is FRED series AHETPI. The data page lists the full source set with stable series identifiers.
Does TPI cover housing and healthcare adequately?
Partially. Housing is represented by three constituents: the median sale price of a single-family home, median monthly rent, and the price per square foot of new construction. Healthcare is represented by one constituent: one day in a hospital room. Neither category is represented at the granularity of a dedicated index. The constituents page documents the source series and known measurement gaps for each.
Does TPI account for differences across US regions?
No. The TPI-US 25 is a national index. Regional time prices differ — wages and prices both vary across metros — and the national average obscures that variation. A regional version is out of scope for v1.
Does TPI measure quality of life?
No. Quality of life depends on factors the index does not measure: leisure, health, environmental conditions, social ties, and goods not available at any price. TPI measures the work-time cost of a defined basket. It is a narrow, well-defined input to questions about welfare, not an answer to those questions.