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

This paper applies production theory to define a new set of inputs for U.S. households for thepost-war II period, tests the new inputs to see if they support a complete household-demandsystem, and reports a new social cost-of-living index. The data support a demand system withnine 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 forwomen’s housework. Some changes in the demand are associated with household technologyand demographics. My social cost-of-living index rises at an approximately 1.4 percent per yearslower over the post-war era than the implicit price deflator.[...]