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Plutocratic and Democratic Consumer Price Indexes: an Estimation of a Democratic Index for Italy 1995-2005

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Author Info
Francesco CHELLI () (Universita' Politecnica delle Marche, Dipartimento di Economia)
Elvio MATTIOLI () (Universita' Politecnica delle Marche, Dipartimento di Economia)
Abstract

The consumer price indexes for the entire country and those for individual households are weighted arithmetic averages of relative prices, and they differ essentially in terms of their weighting systems. Whereas the former use the proportions of total expenditure on goods and services, the latter use the proportions of expenditure by each household. In the usual calculation of the index for the entire country, each household contributes to determining the national index with a weight proportional to its expenditure. In other words, the households that spend more - that is, the wealthier ones - are represented in calculation of the national index to a greater extent, and this explains why the latter is termed the 'plutocratic index'. In contraposition to plutocratic indexes are the 'democratic' ones in which the same weight is assigned to each household.;The paper presents a first estimation of the democratic price indexes for Italy in the period 1995-2002. The results show significant differences between the two calculation methods.

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Publisher Info
Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Economia in its series Working Papers with number 285.

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Length: 16
Date of creation: May 2007
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Handle: RePEc:anc:wpaper:285

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Related research
Keywords: consumer price indexes; inflation; plutocratic and democratic indexes; price policy;

Find related papers by JEL classification:
C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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