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Quality-Adjusted Unit Value Index: Are Changes in Average Prices Inflation or Quality Change?

Author

Listed:
  • John Haltiwanger
  • R. Benjamin Rodriguez
  • Ron Jarmin
  • Matthew D. Shapiro

Abstract

The growing availability of digitized item-level transaction data has led to widespread use of the average selling price, called the unit value index (UVI) by researchers, to track price change. Though commonly used by retailers and market analysts as indicators of price trends, the UVI only provides reliable measures of inflation when the goods it covers are truly homogeneous. This paper derives and analyzes a decomposition of the change in the UVI and a quality-adjusted UVI using hedonics. It separates inflation and effects of product heterogeneity and shows that shifts toward higher-quality models explains increasing average prices of notebook computers.

Suggested Citation

  • John Haltiwanger & R. Benjamin Rodriguez & Ron Jarmin & Matthew D. Shapiro, 2026. "Quality-Adjusted Unit Value Index: Are Changes in Average Prices Inflation or Quality Change?," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 551-555, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:551-555
    DOI: 10.1257/pandp.20261060
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    References listed on IDEAS

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    1. David M. Byrne & Brian K. Kovak & Ryan Michaels, 2017. "Quality-Adjusted Price Measurement: A New Approach with Evidence from Semiconductors," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 330-342, May.
    2. Jan de Haan & Frances Krsinich, 2018. "Time Dummy Hedonic and Quality‐Adjusted Unit Value Indexes: Do They Really Differ?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(4), pages 757-776, December.
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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