NX – Social Security and chained CPI

One of the key concepts in restricting the growth of Social Security expenses is the idea of the chained CPI (Consumer Price Index). Rather than going with the straight inflation increases that we get from normal CPI calculations, the rate is scaled back on the premise that people, faced with less income, will alter their purchasing habits to compensate – less expensive cuts of meat, or substituting chicken for beef or pork – thus reducing the effective rate of inflation.

What does that have to do with Easter Island? Check out this NPR story, and ponder the following: if the rat theory is correct – that the island’s inhabitants adjusted to the changed circumstances by making different choices – are we effectively doing the same thing to people who depend on Social Security if/when we switch to a chained CPI method of calculation for annual payment increases? If so, do some of Krulwich’s thoughts about our ecological future apply to a domestic social policy decision?

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