Whose Inflation? A Characterization of the CPI Plutocratic Gap
AbstractPrais (1958) showed that the standard CPI computed by most statistical agencies can be interpreted as a weighted average of household price indexes, where the weight of each household is determined by its total expenditures. In this paper, we analytically decompose the difference between the standard CPI and a democratically weighted index (ie, the CPI plutocratic-democratic gap) as the product of expenditure inequality and the sample covariance between the elementary individual price indexes and a parameter which is a function of the expenditure elasticity of each good. This decomposition allows us to interpret variations in the size and sign of the plutocratic-democratic gap, and also to discuss issues pertaining to group indexes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0110001.
Length: 12 pages
Date of creation: 05 Oct 2001
Date of revision: 20 Oct 2001
Note: Forthcoming in Oxford Economic Papers. Type of Document - PDF; prepared on MacOSX - CMac; to print on any printer; pages: 12; figures: none
Contact details of provider:
Web page: http://18.104.22.168
Consumer price index; plutocratic index; democratic index; group index; aggregation; equivalence scales; inflation.;
Other versions of this item:
- Eduardo Ley, 2005. "Whose inflation? A characterization of the CPI plutocratic gap," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 634-646, October.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- S. Nuri Erbas & Chera L. Sayers, 1998. "Is the United States CPI Biased Across Income and Age Groups?," IMF Working Papers 98/136, International Monetary Fund.
- Angus Deaton, 1998. "Getting Prices Right: What Should Be Done?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 37-46, Winter.
- Frank A Cowell, 2006. "Inequality: Measurement," STICERD - Distributional Analysis Research Programme Papers 86, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Pollak, Robert A, 1980. "Group Cost-of-Living Indexes," American Economic Review, American Economic Association, vol. 70(2), pages 273-78, May.
- Newbery, David M, 1995. "The Distributional Impact of Price Changes in Hungary and the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(431), pages 847-63, July.
- Jorgenson, Dale W & Slesnick, Daniel T, 1999. "Indexing Government Programs for Changes in the Cost of Living," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 170-81, April.
- Mario Izquierdo & Eduardo Ley & Javier Ruiz-Castillo, 2003. "The Plutocratic Gap in the CPI: Evidence from Spain," IMF Staff Papers, Palgrave Macmillan, vol. 50(1), pages 7.
- Yitzhaki, Shlomo, 1996. "On Using Linear Regressions in Welfare Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(4), pages 478-86, October.
- Thomas F. Crossley & Krishna Pendakur, 2006.
"The Social Cost-of-Living: Welfare Foundations and Estimation,"
Social and Economic Dimensions of an Aging Population Research Papers
155, McMaster University.
- Thomas Crossley & Krishna Pendakur, 2006. "The social cost-of-living: welfare foundations and estimation," IFS Working Papers W06/10, Institute for Fiscal Studies.
- Thomas F. Crossley & Krishna Pendakur, 2006. "The Social Cost-of-Living: Welfare Foundations and Estimation," Quantitative Studies in Economics and Population Research Reports 407, McMaster University.
- Liberati, Paolo, 2012. "Democratic, Plutocratic and Social Weights in Price Indexes," MPRA Paper 43978, University Library of Munich, Germany.
- Goni, Edwin & Lopez, Humberto & Serven, Luis, 2006. "Getting realabout inequality : evidence from Brazil, Colombia, Mexico, and Peru," Policy Research Working Paper Series 3815, The World Bank.
- David Fielding, 2010. "Non-monetary Determinants of Inflation Volatility: Evidence from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 19(1), pages 111-139, January.
- Ehrmann, Michael & Tzamourani, Panagiota, 2012.
"Memories of high inflation,"
European Journal of Political Economy,
Elsevier, vol. 28(2), pages 174-191.
- repec:ebl:ecbull:v:4:y:2002:i:3:p:1-5 is not listed on IDEAS
- Morné Oosthuizen, 2007. "Consumer Price Inflation across the Income Distribution in South Africa," Working Papers 07129, University of Cape Town, Development Policy Research Unit.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.