Number: RS20942
Title: Adjusting Federal Benefits for Geographic Differences in the Cost of Living
Authors: Brian W. Cashell, Government and Finance Division 
Abstract: By indexing various benefits and transfer payments to the consumer price index (CPI), policymakers intended that the real value, or purchasing power, of those payments not be eroded by increases in the general level of prices. Although such indexing provisions may compensate for changing economic conditions over time, there is no allowance for substantial geographic differences in the cost of living. A separate CPI is published for each of a number of metropolitan areas, but those figures allow only a comparison of inflation rates experienced by residents of those areas. The CPI does not allow interarea cost of living comparisons.
Pages: 6
Date: August 20, 2007