Quality Change in Price Indexes
- 1 February 1998
- journal article
- Published by American Economic Association in Journal of Economic Perspectives
- Vol. 12 (1) , 59-68
- https://doi.org/10.1257/jep.12.1.59
Abstract
Price indexes provide the fundamental building blocks for measuring the general price level along with real incomes and real output. But the most important single price index for the United States, the CPI, has been criticized as significantly underestimating the pace of quality change. This paper sketches the issues involved in the measurement of quality change in price indexes. It reviews the theory of quality change, discusses how the Bureau of Labor Statistics deals with quality change, and provides examples of measurement issues in practice. It concludes with a proposal to resolve the massive uncertainties in this area.Keywords
This publication has 1 reference indexed in Scilit:
- Addressing the Quality Change Issue in the Consumer Price IndexBrookings Papers on Economic Activity, 1997