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Different Approaches to Estimating Hedonic Indexes

Different Approaches to Estimating Hedonic Indexes

(p.235) 8 Different Approaches to Estimating Hedonic Indexes
Hard-to-Measure Goods and Services
Saeed HeraviMick Silver
University of Chicago Press

This chapter examines alternative approaches to the use of hedonic indexes for Consumer Price Index measurement in dynamic markets to explicitly adjust for in-sample and out-of-sample bias when both matched and unmatched data are used. The chapter is organized as follows. Section 8.2 describes the broad nature of hedonic indexes. Section 8.3 outlines thirty-six alternative methods and discusses their relative merits. Section 8.4 summarizes research issues and formulas. Section 8.5 outlines the data for the study: monthly scanner data for three electrical consumer durables: washing machines, vacuum cleaners, and dishwashers. Section 8.6 discusses the results from the thirty-six measures for three products over two years, that is, 216 resulting index numbers. It employs a meta-analysis of this data to better establish the patterns from employing different index number formulations.

Keywords:   hedonic indexes, consumer price index, economic measurement, sample bias, washing machines, vacuum cleaners, dishwashers

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