Many thanks to John Amos for providing me with the link to the Turner Commission -
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In a sense this is an attempt to provide one potential answer to my question asking if anyone knows of any "similar empirical research that has been carried out into the long term relationship between price indices and actual expenditure by households and individuals".
I placed the following note in the library in July 2012 on pension adequacy - Pension adequacy and its implications for the suitability...
The note used the pension adequacy concept from the Turner Commission quoted by Hutton in his review of public sector pensions.
I was unable to find a copy of the Turner Commission reports - references below - so was unable to take my analysis further.
I do not know what Turner based his pension adequacy upon but it seems plausible that it was some sort of an assessment of expenditure rather than income. If it is based upon expenditure it will have an emphasis on pensions but it may provide a methodology which might offer a useful contribution to the Johnson Review.
Does anyone have copies of the Turner Commission reports or know of how pension adequacy was put together?
Wishing you all a Merry Christmas.
Pensions Commission (2004), Pensions: Challenges and Choices - The First Report of the
Pensions Commission (2005), A New Pension Settlement for the Twenty-First Century - The
Second Report of the Pensions Commission
Sent: 19-12-2013 10:22
From: Arthur Barnett
Subject: Long term behaviour of Price Indices and expenditure of households and individuals
The RSS RPI/CPI user group committee met with the Johnson Review Team on 28th November. At that meeting Paul Johnson expressed interest in an empirical comparison of price indices and actual historic household expenditure. I offered some thoughts on how this could be done and was asked to prepare note which I have placed in the library.
The note concentrates on how to get the data to compare price indices with household expenditure. There are a couple of brief paragraphs in the introduction on why such comparisons are important which are copied below.
The long term behaviour of price indices has always been important with, for example, long term benefits such as those for the disabled. However, the introduction of average salary pension contracts based on price indices adds another dimension to the problem. For example, teachers entering the work force in their early twenties and eventually dying in their nineties could be subject to such a contract for a period of 70 years or so. Contractual arrangements, particularly in the private sector, are more difficult to change than state benefits if the evidence suggests it becomes necessary.
A comparison with expenditure is important because that is related to how people can take part in society - social inclusion. There are technical issues with the construction of price indices such as the concept of constant quality. There are also conceptual issues. None of this argues for uprating to match the change in household expenditure which includes the effect of other elements notably the rise in the standard of living. It argues for the need to understand the relationship between price indices and expenditure both conceptually and empirically from the perspective and experience of households and individuals.
Something that I - and probably the Review Team - would find useful is if anyone knows of similar empirical research that has been carried out into the long term relationship between price indices and actual expenditure by households and individuals.