In recent news there is a proposal to use 'chained CPI' for the COLA adjustments for Social Security. I'm not going to comment on the politics of that idea since I prefer to avoid political debates here. However I do think its useful to see the progressive difference between Chained CPI-U or C-CPI-U versus CPI-W over time. I'll also throw in CPI-U for comparison, hey why not. C-CPI-U is relatively new and they only have numbers back to 1999.
I pulled the data from the BLS CPI site. I used the multi-page table to get the figures. I'm only looking at the December index value to simplify it. I also normalized them all to start at basis of 100.0 in 1999. Here is the annual December Index for each index from Dec. 1999 to Dec. 2012:
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The total increase for the 13 year periods are :
CAGR is the compound annual growth rate. Annually the difference isn't huge but it adds up to a few % difference over a decade.
Put this into perspective, say someones monthly social security check starts at $1000. If it goes up 2.48% with CPI-W then the next year the check will be $1,024.80. If we use C-CPI-U instead then it will go up 2.15% and they'd get $1,021.50. Thats a monthly difference of $3.30 for a single year. Now over time that marginal difference would add up. Starting with $1000 in 1999 you'd end up with $1,375 from CPI-W and only $1,319 from C-CPI-U or a $52 difference per month cumulative over 13 years.