The influence of goods' quality on their price indices

Vadim Zyamalov and Marina Turuntseva

Journal of the New Economic Association, 2024, vol. 62, issue 1, 196-209

Abstract: This paper provides an example of applying the hedonic method of adjusting price indices that takes into account the impact of changes in the quality of goods on their consumer price. With first attempts to apply dating back to the beginning of the XX century, and being finally formalized by Griliches in 1961, the method allows us to divide the observed price change into a part determined by inflationary processes and a part associated with changes in consumer qualities of goods. In foreign literature, the method has received wide coverage; it has been applied to the prices of a wide variety of goods: from consumer electronics to air tickets in the US. Currently, the method is often used to study the real estate market. At the same time, in the Russian literature there are relatively few works considering this method. In this paper, the authors attempted to apply the method to prices of consumer electronics (laptops) and used cars. Also, the authors present updated results from previously published works related to mobile phones and TVs. The application of the method showed that it allows obtaining adjusted values of price indices that ate significantly different from simple observable prices index.

Keywords: consumer goods; price indices; hedonic method; quality characteristics; inflation (search for similar items in EconPapers)
JEL-codes: C54 E20 E23 E26 E66 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:62:p:196-209

DOI: 10.31737/22212264_2024_1_196-209

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