A government is using CPI data to adjust social security payments. How might substitution bias affect these adjustments?

• A. Substitution bias might lead to over-adjustment of payments, as the CPI overstates inflation.
• B. Substitution bias might lead to under-adjustment of payments, as the CPI understates inflation.
• C. Substitution bias ensures accurate adjustment of payments, as it reflects true inflation.
• D. Substitution bias has no effect on social security payment adjustments.

Answer: (A)