# Title 5

## SECTION 591.221

### 591.221 How does OPM compute the consumer expenditure weights it uses to combine price indexes

§ 591.221 How does OPM compute the consumer expenditure weights it uses to combine price indexes?OPM uses the following ten-step process to compute consumer expenditure weights:

(a) *Step 1.* OPM obtains the latest BLS tabulated CES data
nationwide and for the Washington, DC, area.

(b) *Step 2.* In both the nationwide and DC area tabulated
data, OPM replaces the homeowners' expenditures for shelter with
estimated rental values of owned homes that are available elsewhere
in tabulated CES data. Note: These replacements are consistent with
the rental equivalence approach described in § 591.219.

(c) *Step 3.* OPM selects the central income groups in the
nationwide CES tabulation.

(d) *Step 4.* OPM calculates the expenditure shares
(*i.e.,* percentages) for each central income group by
dividing each of its DEC expenditures by total expenditures for the
income group. OPM also calculates expenditure shares for total
nationwide expenditures by dividing each nationwide DEC expenditure
by total nationwide expenditures.

(e) *Step 5.* OPM computes a democratic distribution of
expenditure shares by averaging the central income groups' shares
at each DEC and higher level of aggregation.

(f) *Step 6.* OPM computes a set of ratios by dividing each
expenditure share of the nationwide democratic distribution by the
corresponding expenditure share of the total national
distribution.

(g) *Step 7.* OPM computes estimated expenditures for
Washington DC for each DC DEC and higher level of aggregation that
BLS reported by multiplying the reported expenditure by the
corresponding ratio derived in Step 6.

(h) *Step 8.* For each DC DEC and higher level of
aggregation that BLS did not report, OPM computes expenditures for
DC by distributing the DC expenditure calculated in step 7 using
the distribution of expenditure shares derived in step 5.

(i) *Step 9.* As described in § 591.211(c), OPM classifies
each DEC and aggregate into PEGs.

(j) *Step 10.* OPM computes expenditure weights by dividing
each DEC or aggregate by the total expenditure derived from the DC
expenditure computed in step 8. Therefore, the sum of the MEGs,
PEGs, and DECs, will separately total 100, *i.e.,* so that all
consumer expenditures in the original tabulation are accounted
for.