Measuring well-being
Client: GMB trade union
Brief: A number of members of the union?s Central Executive Council have read the Observer article cited below (?The myth of middle-class inflation?), and it has occurred to them that a price index for low-paid workers might be a useful bargaining tool for the union.
You are asked to report on (a) how price indices are constructed, (b) what items should be dropped, or weighted differently, in a index measuring ?working-class inflation, (c) whether a Paasche or Laspeyres index would be preferable, and (d) are price indices indeed a useful way of measuring (changes in) well-being,
Notes: The report is commissioned by the union?s research department, but is intended to be read by lay representatives of the membership; thus as well as explaining the overall issues and making a recommendation you are expected to provide a clear and accurate account of the technicalities that is nonetheless accessible to those without economics training.
Preliminary reading:
Himmelweit (2001): chapters 2 and 4 (pages 93-99 cover the basic technicalities)
Elliott, Larry (2006) ?Minimum wage fails to close pay gap?, The Guardian, 16 October, page 30
Seager, Ashley (2006) ?The myth of middle-class inflation?, The Guardian, 28 August, page 24
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