A Political Economy of the Measurement of Inflation : The Case of France

Inflation should no longer be a politically sensitive indicator. Indeed, since the early 1980s, macroeconomic policies have managed to contain it. Yet the consumer price index (CPI), which is the main indicator for measuring inflation, remains very frequently consulted by citizens, due to its multiple uses. The CPI is used for indexing wages, pensions, but also various contracts such as food pensions. It is also used by National Accounts to deflate macroeconomic values and to provide data in “real” terms. But how is this CPI measured? index? What reforms have happened to give shape to the XXIst century CPI? This book presents the CPI based on the study of the controversies that have marked its history. Set in both the socio-economic and ideas contexts, these controversies show the eminently conventional and political nature of the CPI and, therefore, of many other macroeconomic indicators, such as growth or productivity. Contents List of Figures List of Tables List of Boxes Introduction A Constructed Datum Outline of the Book References Chapter 1: ‘What is a Price Index’: Statistical Approach 1 Introduction 2 The Statistical Principle of a Price Index: Elementary Indices and Aggregation 2.1 The Elementary Indices 2.2 Aggregating the Elementary Indices 3 The Various Possible Measures: Laspeyres, Paasche, Fisher 3.1 The Laspeyres Price Index 3.2 The Paasche Price Index 3.3 The Fisher Price Index 3.4 The Missing Properties of the Synthetic Indices 4 Implementing Price Indices Both Statistically and Practically 4.1 Chain Indices 4.2 The Geometric Means of the Micro Price Indices 4.3 Quantities, Volumes and Pure Prices 5 The Composition of the Price Index and the Evolution of the CPI over Time References Chapter 2: A Political Economy of the Price Index 1913–1990 1 Introduction 2 The Emergence of a Price Index: Between Proxy for Industrial Activity and Guarantee of Purchasing Power 3 Eight Generations of the Price Index 4 1950–1970: A Price Index Policy? 4.1 Standard Budgets 4.2 Wage Indexation Policies and Index Policies 4.3 A ‘Traumatic’ Period for INSEE 4.4 A Different Story in the USA During the 1950s? 5 The Life of the CGT Index (1972–1998) 5.1 The Origins of the CGT Index 5.2 The Specific Characteristics of the CGT Index 5.3 Competitive Devaluation and the End of the CGT Index 6 The 1990s and 2000s: Between Finance and Governmentality 6.1 The Indexation of Financial Products 6.2 A Price Index ‘Without Tobacco’ References Chapter 3: The European Turning Point 1 Maastricht (1992) and the HICP 1.1 Maastricht and Inflation 1.2 The HICP 1.2.1 The Context in Which the HICP Was Created 1.2.2 The HICP: The Calculation Principle 2 The Price Index During the Changeover to the Euro 2.1 INSEE and the Changeover to the Euro 2.2 Advances in Measuring Perceptions of Inflation 2.3 New Actors 2.3.1 The Large Retailers Get Involved 2.3.2 The Effects of the 2007 Presidential Campaign 3 What Is the ‘Right’ Level of Price Inflation? 3.1 Individuals’ Frequency of Purchasing 3.2 The Growing Inequalities Between Socio-occupational Categories 3.3 Involuntary Expenditure: Between Old Realities and a New Concept? 4 An Unheard-of Response from INSEE: The Launch of an Online Individual Simulator References Chapter 4: The Quality Effect 1 The Boskin Report (1996) and the Idea of “Overstated” Inflation 1.1 The Contents of the Boskin Report 1.2 The Post-Boskin Years in France 2 The Objectivation of Quality: Between Interpretations and Modelling 2.1 Implicit Methods of Dealing with Quality 2.2 The Explicit Methods 2.3 Services Are Affected 2.4 The Uncertain and Convention-Based Nature of Quality 3 The Hedonic Method: Between Promises and Disappointments 3.1 The Principle of the Hedonic Method 3.2 Interpretations of Quality 3.3 Hedonic Prices: Between Communicative Power and Weakness in Application? 3.3.1 Some Theoretical Critiques 3.3.2 The Hedonic Method’s Sphere of Application Remains Narrow 3.3.3 “Consumption Profile” Methods 4 Conclusion. Taking Account of Sustainability, the Environment and Care Work References Chapter 5: From Consumer Prices to the ‘Cost of Living’ 1 A Hundred Years of Convergence Towards a Cost of Living Index? 1.1 Realities Elude Statistics 1.2 The Intellectual Paradigm 1.3 A Big Comeback for Utility? 1.3.1 Defining the COLI 1.3.2 Fifty Years After They Were Developed Conceptually, Are Constant-Utility Indices Being Put into Practice? 1.3.3 Checkout Data and the CUI 2 Is Inflation Over- or Understated? 2.1 Substitutability in Purchasing Practices 2.2 A New Kind of Challenge References Chapter 6: The Reform of ‘Checkout Data’ 1 Investing in Big Data 2 Checkout Data 3 These Digital Innovations Present a Challenge to the Notion of ‘Product’ 4 ‘Exhaustive’ but Impoverished Data References Chapter 7: Under- or Overestimation of Inflation? 1 The Importance of the Knowledge Regime 2 The Dissemination of the Statement that “Inflation Is Being Overestimated” 2.1 First Trade Union Protests Against the Underestimation of Inflation in the 1950s 2.2 Second Wave of Trade Union Protest: The Construction of an Alternative Index 2.3 A Counter-attack from the Other Side of the Atlantic: Inflation Overestimated? 3 The Emergence of the Statement that “Inflation Is Being Overestimated” 3.1 The Socio-technical Conditions for the Emergence 3.2 The Pendulum of History: The ‘Gilets Jaunes’ Effect 4 Conclusion References Conclusion The Consequences for Growth and Productivity References Index