Price Index Concepts and Measurement

Price Index Concepts and Measurement

W. Diewert, John Greenlees, and Charles R. Hulten

Print publication date: 2013

ISBN: 9780226148557

Publisher: University of Chicago Press

Abstract

The report of the National Research Council Panel on Conceptual, Measurement, and Other Statistical Issues in Developing Cost-of-Living Indexes (COLI) addresses all the fundamental issues in consumer price measurement. The authors compare hedonic and matched-model indexes for apparel prices in the United States using Sears catalogue data over the period 1914–1993, and compare the resulting indexes with the corresponding Bureau of Labor Statistics apparel index over the same period. This book provides a brief detail of the COLI concept, quality change and new goods, and index scope. The Consumer Price Index (CPI) is constructed in part using a Laspeyres-type fixed weight index formula that does not reflect the potential for consumer substitution in response to relative price changes. The COLI approach to CPI index construction is superior to either the Cost-of-Goods Index or test approaches, but it should be noted that the test approach can be useful on occasion as a supplement to the economic approach to index construction. Thus, the book provides a discussion of how the new manuals tried to present reasonable principles rather than specific rules. These manuals also tried to harmonize their contents so that they would not contradict each other.

Table of Contents

Introduction What are the Issues?

W. Erwin Diewert, John Greenlees, and Charles Hulten

3 Reassessing the U.S. Quality Adjustment to Computer Prices

Robert C. Feenstra and Christopher R. Knittel

4 Hedonic Imputation versus Time Dummy Hedonic Indexes

W. Erwin Diewert, Saeed Heravi, and Mick Silver

8 Can A Disease-Based Price Index Improve the Estimation of the Medical Consumer Price Index?

Xue Song, William D. Marder, Robert Houchens, Jonathan E. Conklin, and Ralph Bradley