Scanner Data, Elementary Price Indexes and the Chain Drift Problem

Walter Diewert

Chapter Chapter 11 in Advances in Economic Measurement, 2022, pp 445-606 from Springer

Abstract: Abstract Scanner data from retail outlets has allowed national statistical agencies to construct superlative indexes at the first stage of aggregation. However, if there are strong fluctuations in prices and quantities, chained indexes using scanner data will typically show strong trends which are too large to be credible. To control this chain drift problem, the chapter suggests the use of multilateral index formulae. The chapter compares all of the main multilateral index number formulae both from a theoretical perspective and illustrates the results using a scanner data set on sales of frozen juices for a retail outlet in Chicago. The chapter suggests a new multilateral method that is based on linking observations that have the most similar structure of relative prices and quantities.

Keywords: Multilateral; Superlative and similarity linked indexes (search for similar items in EconPapers)
Date: 2022
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Working Paper: Scanner Data, Elementary Price Indexes and the Chain Drift Problem (2018)
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DOI: 10.1007/978-981-19-2023-3_11

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