Marketizing U.S. Production in the Post-War Era: Implications for Estimating CPI Bias and Real Income from a Complete-Household-Demand System

This paper applies production theory to define a new set of inputs for U.S. households for the post-war II period, tests the new inputs to see if they support a complete household-demand system, and reports a new social cost-of-living index. The data support a demand system with nine major input categories and yield plausible price, income, and translating-variable effects. Women’s and men’s housework are complements, but other input categories are substitutes for women’s housework. Some changes in the demand are associated with household technology and demographics. My social cost-of-living index rises at an approximately 1.4 percent per year slower over the post-war era than the implicit price deflator