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This is, however, a different thing from measuring changes in the prices of all those items which form a complete regimen for a standard of living, however defined ; and, in fact (except possibly in the case of a bare subsistence standard), it would obviously bo impossible to draw up a detailed and fixed " standard of living " regimen that would have any really widespread significance. A complete standard of living varies not only from place to place and over time, but also from person to person. The items included in an index regimen therefore only sample the various budget groups and represent something less than the aggregate budget expenditure. The essential requirements are that the items included should be properly representative and, in the aggregate, represent a large portion of the total budget expenditure. It is customarily assumed that the prices of the household goods and services outside the index regimen move in approximately the same direction and to the same relative extent as those within the regimen. (6) MEASUREMENT OF COST-OF-LIVING CHAN(3E,S Despite the fact that retail-prices index numbers are designed to measure price-changes purely and simply, they are widely used as indicators of changes in the average* cost of living and for the adjustment of wages and salary rates in conformity with such changes. In peacetime, when economic conditions pursue their normal course, the current retail indexes do afford a reliable guide to broad cost-of-living changes. This follows from the fact that they embody a wide range of essential cost-of-living commodities and services and that standards of living normally change slowly and often imperceptibly. Stability of regimen and weights is, however, essential to a prices index, which, as such, must exclude changes in the standard of living due both to variations in the quantity of particular goods bought and to substitutions of one commodity for another. It is the common experience of everyday life that such changes do occur, yet the process is normally a gradual one ; consequently retail indexes, although gradually becoming less efficient indicators of cost-of-living changes as the base date recedes in time, do serve satisfactorily for this purpose over relatively long periods. When the divergence between the standard of living represented by the base year regimen and weights and the current standard of living becomes noticeably wide it is usual to revise the index in such a way as to restore its approximate relationship to current living standards whilst doing least harm to its efficiency as an indicator of comparative price-changes over time, The position is very different in wartime. As opposed to the slow transition of living standards characteristic of normal times, wartime conditions bring in their train violent and far-reaching changes in the economic structure which are reflected in equally abrupt and widespread changes in customary standards of living. Many causes contribute towards such changes, but the following are of particular importance from the viewpoint of measuring variations in the cost of living : — («,) Price-changes. —Some commodities, particularly imported items, tend to rise rapidly in price whilst others which are domestically produced and therefore subject to a greater measure of control may be kept stable in price or rise to a lesser degree. This leads to economies and readjustments of expenditure by many householders, especially where wages and salaries do not keep pace with the rising price-level. (b) Heartily Conditions.— -Some commodities become in short supply, or may even disappear from the market. The principle of equal sacrifice leads to the institution of rationing systems for important commodities which are not in adequate supply. In general, wartime brings a definite curtailment in the consumption of many commodities and services. (o) Substitution.— Commodity shortages, rationing, and increased prices for various articles result in a search by the consumer for substitute commodities. (d) Quality-deterioration. —There is often a deterioration in quality, which implies a faster rate of consumption in that the consumer has to purchase more of a particular commodity over a given period than, before. (e) Income-changes. —Many sections of the community both earn and spend larger incomes in wartime than in peacetime. Whilst expenditure on essentials does not in general increase progressively with income, yet some change in relative expenditure as between the major cost-of-living expenditure groups can be anticipated from this cause. In so far also as income rises faster than the price-level, and goods are available, there will be a tendency in some directions for the standard of living to rise. Changes in taxation are also a relevant factor. Provided that the base period regimen and weights are kept constant and comparable price quotations can continue to be obtained, the mere fact of variations in the available quantities of particular commodities or of changes in the relative expenditure on them does not affect the index as a measure of pure price variations. Questions of substitution and quality present some difficulty, but even in these cases suitable statistical techniques can be developed to maintain the usefulness of the index as a measure of price variations. If, however, in the circumstances mentioned, the peacetime index continues to be used as an indicator of changes in the wartime cost of living, then misleading and illusory results are likely to be obtained. To do so is to ignore the changes in the quantities and kinds of goods and services actually available, and goods that are rationed or otherwise in short supply would consequently be overweighted in relation to current consumption. The average cost of living depends not only on the prices of goods and services, but also on the quantities actually available for household consumption. An index that is to have any validity as a measure of wartime cost of living must therefore take account not only of changes in the prices of consumers' goods and services, but also of alterations in the proportions in which they are available to the public. In short, to apply an index based on a peacetime regimen and with peacetime weights to wartime cost of living involves making the tacit assumption that the average household consumes the same goods and services, of the same quality, and in. the same proportions in wartime as in peacetime. This is clearly untrue, for modern " total " warfare brings about easily

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