Quantifying Quality Growth

Mark Bils and Pete Klenow

American Economic Review, 2001, vol. 91, issue 4, 1006-1030

Abstract: Using U.S. Consumer Expenditure Surveys, we estimate "quality Engel curves" for 66 durable goods based on the extent richer households pay more for each good. The same data show that the average price paid rises faster from 1980 to 1996 for goods with steeper quality Engel curves, as if households are ascending these curves. BLS prices likewise increase more quickly for goods with steeper quality Engel curves, suggesting the BLS does not fully net out the impact of quality upgrading. We estimate that annual quality growth averages 3.7 percent for our goods, with 2.2 percent showing up as higher inflation.

JEL-codes: D12 E31 L62 L63 L68 (search for similar items in EconPapers)
Date: 2001
Note: DOI: 10.1257/aer.91.4.1006
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Citations: View citations in EconPapers (127)

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