The MetroWest Economic Research Center (MERC) tracks the cost of living in one region only: the MetroWest CCSA, which includes the towns of Ashland, Framingham, Holliston, Hopkinton, Natick, Sherborn, Southborough, Sudbury, and Wayland. MERC does this by calculating the average cost of a "market basket" of 57 items that are representative of the items typically purchased by professional and executive households. The items in this "market basket" were selected by The Council for Community and Economic Research (C2ER - formerly ACCRA) based on a survey of consumer spending patterns done by the U.S. Bureau of Labor Statistics. The 57 items are grouped into six sub-categories: grocery items, housing, utilities, transportation, health care and miscellaneous goods and services. In addition to the overall cost of living index, MERC also calculates separate indexes for each of these sub-categories.
Twice each year, in April and October, MERC gathers data on the prices of these items from over 100 businesses in the MetroWest area and calculates the average price of each item. These average prices are then used to calculate each of the sub-indexes and, from them, the overall cost of living index for the area. When calculating each sub-index, every item is assigned a weight that reflects the relative importance of the item in that category of goods and services. The overall cost of living index is then a weighted average of the six sub-indexes, with the weights here reflecting the relative importance of each of the six sub-groups in the overall cost of living. The weights, like the items in the "market basket", are also determined by C2ER based on the information obtained in the Bureau of Labor Statistics survey mentioned previously.
In addition to using this data to track the cost of living in MetroWest, MERC also sends its survey results to C2ER to be included in that group's survey of living costs across the nation (still known as the ACCRA index). The data from MetroWest are combined with the same data from approximately 300 other U.S. communities to calculate the overall average cost of the "market basket" of goods and services. C2ER then calculates the cost of living in each of these cities and towns as a percentage of this national average. The overall index for each city or town is also broken down into the same six sub-indexes described above and is calculated using the same weighting process. These results make it possible to compare living costs in different areas across the country.
Because these indexes are calculated from the prices of a relatively small sample of the many goods and services that middle-management households actually purchase, they are only estimates of the true cost of living in any given area. As with any figure calculated from sample data, there is a margin of error in the estimate. Since the items in the market basket were not randomly chosen, however, it is not possible to calculate exactly what that margin of error is. In its literature, C2ER suggests that small differences in these indexes (up to 3 or 4 percentage points) do not necessarily mean that differences in the true cost of living actually exist.MERC would like to thank the following survey participants for their assistance with this project. (Click to visit website.)
Mr. Bill Gassett, Hopkinton, MA Real Estate