<< Click to Display Table of Contents >> Navigation:  Using the Geographic Assessor > Frequently Asked Questions > Data Background Information > Data Background FAQ #16 Frequently Asked Questions

QUESTION:  Why have the COL differentials between locations gone up (or down) so much when I compare them year to year (or release to release)?

 

Every release of the Geographic Assessor databases, updated twice each quarter, is a snapshot of the cost-of-living differentials and is not statistically comparable with past (or future) releases.  

 

However, ERI does realize that our subscribers use the data in exactly this manner.  The following issues should be considered in understanding any analysis and comparisons using the data from a particular release over time:

 

1.Approximately every six weeks, a new United States National Average is calculated using the price level index for all locations for which survey data is available. Each individual location price level index is then calculated relative to the new National Average.  The National Average is composed of all the areas surveyed which changes slightly for every release. ERI constantly adds new locations based on subscriber input.  (In addition, locations are occasionally deleted or consolidated as location names and official geographical delineations change.)  The result is that, twice each quarter, the National Average changes, and the individual location price level index relative to the National Average changes. The comparison from release to release is not completely “apples to apples.”

 

2.The market basket of goods and services used to build up to the price level index for the expenditure categories changes over time.  This is especially true for proxy goods and services surveyed in the information technology category (e.g. The same wireless devices available one year ago might not still be available or the price may have dropped substantially; eventually another proxy wireless device will replace the current wireless good in the sample.).

 

3.ERI recognizes that living patterns change over time and thus makes adjustments to the underlying earnings level expenditure pattern assumptions in the Geographic Assessor model.

 

4.Housing is typically the largest component of expenditures.  Recent periods of home price variability have led ERI researchers to note larger and more volatile changes in release to release differentials due to home price changes. ERI reports the data as “what it is” over the collection period.  For example, we do not use seasonal adjustments or trending in our estimated average home price data.

 

5.Each release, updated twice each quarter, may contain different underlying Housing Assumptions.  For example, the assumed mortgage rate and annual property tax rates may change.  These changes effect the estimated housing costs in the Two City Comparison.

 

6.ERI researchers are constantly improving data collection methods, sources, and analysis. Concurrently, modeling and forecasting techniques integral to Geographic Assessor differentials are under continual review and refinement as data becomes available at more granular levels and with shorter time lags.

 

See Two City Comparison - Background for more information.