Chained dollars is a method of adjusting real dollar amounts for inflation over time, so as to allow comparison of figures from different years. The U.S. Department of Commerce introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2005 as the base year.
The difference between chained dollars and the previous measure, constant dollars, is that while the latter is weighted by a constant basket of goods and services, chained dollars are weighted by a basket that changes from year to year so as to more accurately reflect spending. The basket is an average of the basket for successive pairs of years.
The technique is so named because the second number in a pair of successive years becomes the first in the next pair. The result is a "chain" of weights and averages. The advantage of using the chained-dollar measure is that it is more closely related to any given period covered and is therefore subject to less distortion over time.
Famous quotes containing the words chained and/or dollars:
“who chained themselves to subways for the endless ride from Battery
to holy Bronx on benzedrine until the noise of wheels and children
brought them down shuddering mouth-wracked and battered bleak of brain and drained of brilliance in the drear light of Zoo,”
—Allen Ginsberg (b. 1926)
“Let those talk of poverty and hard times who will in the towns and cities; cannot the emigrant who can pay his fare to New York or Boston pay five dollars more to get here ... and be as rich as he pleases, where land virtually costs nothing, and houses only the labor of building, and he may begin life as Adam did? If he will still remember the distinction of poor and rich, let him bespeak him a narrower house forthwith.”
—Henry David Thoreau (1817–1862)