The Application of Hedonic Methods in Quality-Adjusted Price Indices

The Application of Hedonic Methods in Quality-Adjusted Price Indices PDF

Author: Anna Król

Publisher: Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu

Published: 2020-06-01

Total Pages: 133

ISBN-13: 8376957902

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The measurement of price dynamics is by no means new endeavourin the official statistics but the process of establishing accurate price changes in time still remains challenging in many areas. One such demanding field is the application of appropriate techniques in price index development for providing amendments reflecting quality differences which might occur in the compared commodities. The book presents results of research on the applicability of hedonic methods in adjusting price indices to changes in the goods quality and test the techniques used for hedonic price indices construction using the data sets for various groups of heterogeneous goods, including used automobiles, appartments, household appliances and ICT goods.

Price Indices for Information and Communication Technology Industries - an Application to the German Pc Market

Price Indices for Information and Communication Technology Industries - an Application to the German Pc Market PDF

Author: Dietmar Moch

Publisher:

Published: 2015

Total Pages: 0

ISBN-13:

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Changing product quality, rapid technological progress, and short product life cycles make it difficult to compute indices that correctly reflect the true price movements of IT products. This paper assesses the differences between traditional and quality adjusted indices by providing results for PC hardware. Transaction price data for the period from 1985 to 1994 are used to construct price indices for personal computers in Germany. The use of hedonic methods allows to correct for quality changes. Quality-adjusted hardware prices decline by 34 percent on average per year according to our hedonic index. The estimation confirms the importance of quality adjustment since the decline of average prices at 7 percent p.a. is substantially lower, thus overestimating computer prices and inflation. When the hedonic index for German computer prices is compared to various indices calculated for the US market it seems that the decline of quality adjusted prices in Germany has been significantly higher than in the US. However if prices are converted to US$ the average decline is about 30 percent which is consistent with results for the US.

Hedonic Prices and Quality Adjusted Price Indices Powered by AI

Hedonic Prices and Quality Adjusted Price Indices Powered by AI PDF

Author: Patrick L. Bajari

Publisher:

Published: 2021

Total Pages:

ISBN-13:

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We develop empirical models of hedonic prices and derive hedonic indices for measuring changes in customer welfare based upon deep learning. We first generate abstract product attributes, or "features," from text descriptions and images using deep neural networks, and then use these attributes to estimate the hedonic price function. Specifically, we convert textual information about the product to numeric product features using the ELMO or BERT language models, trained or fine-tuned using Amazon's product descriptions. We convert the product image to numerical product features by a pre-trained ResNet50 image model. To produce the estimated hedonic price function, we use a multi-task neural network again, trained to predict the price of a product simultaneously in all time periods. We apply the models to Amazon's data for first-party apparel sales to estimate hedonic prices. The resulting models have high predictive accuracy, with R2 ranging from 80% to 90%. We also construct hedonic price indices: over the period 2013-2017 the hedonic Fisher price index decreased, providing improvement in customer welfare.

Construction and Application of Property Price Indices

Construction and Application of Property Price Indices PDF

Author: Anthony Owusu-Ansah

Publisher: Routledge

Published: 2018-07-11

Total Pages: 210

ISBN-13: 1351591002

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The importance of house prices to households, real estate developers, banks and policy-makers cannot be overemphasised. House price changes affect consumer spending and business investment patterns, which in turn affect the wider macro economy and the entire business cycle. Measuring and understanding house prices is therefore essential to a functioning economy, but researchers continue to disagree on the best methodological approach for constructing real estate indices. This book argues the need for more accurate house price indices, outlines the various methods used to construct indices and discusses the existing house price indices around the globe. It shows how the raw data of property transactions can be prepared for the purpose of constructing indices, discusses various applications of property price indices and empirically demonstrates how the index numbers can be used to model the supply of new houses and to estimate the price elasticity of supply. Essential reading for economists, real estate professionals and researchers, and policy-makers.

Hedonic Methods in Housing Markets

Hedonic Methods in Housing Markets PDF

Author: Andrea Baranzini

Publisher: Springer Science & Business Media

Published: 2008-09-20

Total Pages: 283

ISBN-13: 0387768157

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Cities are growing worldwide and their sprawl is increasingly challenged for its pressure on open spaces and environmental quality. Economic arguments can help to decide about the trade-off between preserving environmental quality and developing housing and business surfaces, provided the benefits of environmental quality are adequately quantified. To this end, this book focuses on the use and advancement of the “hedonic approach”, an economic valuation technique that analyses and quantifies the sources of rent and property price differentials. Starting from theoretical foundations, the hedonic approach is applied to the valuation of natural land use preservation and noise abatement measures, as well as to residential segregation and discrimination, extending the analysis to the role of the buyers and sellers' identity on housing market prices and to the issue of environmental justice.

Prices, Product Differentiation and Quality Measurement

Prices, Product Differentiation and Quality Measurement PDF

Author: Gian Maria Tomat

Publisher:

Published: 2008

Total Pages: 0

ISBN-13:

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The paper provides an analysis of the problems of construction of quality-adjusted price indexes within the framework of the theory of product differentiation. In the general case of price-making behaviour on the part of firms, hedonic regressions are defined on the basis of reduced forms of the equation relating equilibrium prices to product characteristics. The paper considers the reduced form given by the marginal cost function and shows that the Laspeyres hedonic price index provides a lower bound to the quality-adjusted rate of price change while the Paasche hedonic price index provides an upper bound to the quality-adjusted rate of price change. The properties of hedonic price indexes are compared with those of matched model indexes. The theory is applied to the study of personal computer prices in Italy during the 1995-2000 period.

Consumer Price Index Manual

Consumer Price Index Manual PDF

Author: International Labour Office

Publisher: International Labour Organization

Published: 2004-08-25

Total Pages: 578

ISBN-13: 9789221136996

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The consumer price index (CPI) measures the rate at which prices of consumer goods and services change over time. It is used as a key indicator of economic performance, as well as in the setting of monetary and socio-economic policy such as indexation of wages and social security benefits, purchasing power parities and inflation measures. This manual contains methodological guidelines for statistical offices and other agencies responsible for constructing and calculating CPIs, and also examines underlying economic and statistical concepts involved. Topics covered include: expenditure weights, sampling, price collection, quality adjustment, sampling, price indices calculations, errors and bias, organisation and management, dissemination, index number theory, durables and user costs.

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