Journal of Official Statistics, Vol.5, No.2, 1989. pp. 107–123
Adjustments for Quality Change in the U.S. Consumer Price Index
Paul A. Armknecht and Donald Weyback
Abstract:The construction of the U.S. Consumer Price Index (CPI) assumes that commodities and services of constant quality are priced over time. When one product disappears and a new or slightly different product is substituted, it is difficult to distinguish quality change from price change. In 1983 and 1984 about 3.9% of the items for which prices were collected involved product substitutions, and by far, the highest rates of substitutions occurred among apparel items. This paper examines the effects of product substitutions on the CPI and provides an update on research that should help improve substitutions and the quality adjustment process for apparel items.
Keywords:Consumer Price Index; quality adjustment; product substitution.
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