Consumer preferences and cost of living in Taiwan
This paper studies cost of living standards and variations in growth trends for consumers in Taiwan between 1951 and 2001 by allowing consumer preference to be a variable. Our study shows that ignoring changes in preference structure frequently leads to the underestimation of the consumer's true cost of living standards and growth scales in Taiwan. When changes in preference structure are taken into consideration, as was done in studies by Phlips and Sanz-Ferrer [Phlips, Louis, & Sanz-Ferrer, Richard. (1975). A taste-independent true index of the cost of living. Review of Economics and Statistics, 57(4), 495-501] and Heien and Dunn [Heien, D., & Dunn, J. (1985). The true cost of living index with changing preferences. Journal of Business and Economic Statistics, 3(4), 332-335] in the U.S., the Laspeyres price index may underestimate, not overestimate, the true cost of living standards and the growth scale in Taiwan for the 1980s and 1990s. Based on the above findings, when it is necessary to apply the cost of living adjustment clause to all relevant programs, an alternative index such as the non-parametric studied in this paper may be more appropriate than the usual Laspeyres CPI. We would like to suggest that the statistical authorities in Taiwan should also consider routinely compiling and publishing the non-parametric , together with the Laspeyres CPI.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Braithwait, Steven D, 1980. "The Substitution Bias of the Laspeyres Price Index: An Analysis Using Estimated Cost-of-Living Indexes," American Economic Review, American Economic Association, vol. 70(1), pages 64-77, March.
- Matthew D. Shapiro & David W. Wilcox, 1997.
"Alternative Strategies for Aggregating Prices in the CPI,"
NBER Working Papers
5980, National Bureau of Economic Research, Inc.
- Matthew D. Shapiro & David W. Wilcox, 1997. "Alternative strategies for aggregating prices in the CPI," Review, Federal Reserve Bank of St. Louis, issue May, pages 113-125.
- Robert J. Gordon, 2006.
"The Boskin Commission Report: A Retrospective One Decade Later,"
International Productivity Monitor,
Centre for the Study of Living Standards, vol. 12, pages 7-22, Spring.
- Robert J. Gordon, 2006. "The Boskin Commission Report: A Retrospective One Decade Later," NBER Working Papers 12311, National Bureau of Economic Research, Inc.
- Hill, Robert J., 2006. "Superlative index numbers: not all of them are super," Journal of Econometrics, Elsevier, vol. 130(1), pages 25-43, January.
- Heien, Dale & Dunn, James, 1985. "The True Cost-of-Living Index with Changing Preferences," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 332-343, October.
- Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-221, May.
- Angus Deaton, 1998. "Getting Prices Right: What Should Be Done?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 37-46, Winter.
- Blow, Laura & Crawford, Ian, 2001. "The Cost of Living with the RPI: Substitution Bias in the UK Retail Prices Index," Economic Journal, Royal Economic Society, vol. 111(472), pages F357-82, June.
- Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
- Brent R. Moulton, 1996. "Bias in the Consumer Price Index: What Is the Evidence?," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 159-177, Fall.
- G.M. Peter Swann, 1999. "An Economic Analysis of Taste-A Review of Gary S. Becker: Accounting for Tastes," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 281-296.
- Basmann, R. L. & Diamond, C. A. & Frentrup, J. C. & White, S. N., 1985. "On deviations between neoclassical and GFT-based true cost-of-living indexes derived from the same demand function system," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 45-66.
- Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
- Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, October.
- 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 170-181, April.
- Muellbauer, John, 1975. "The cost of living and taste and quality change," Journal of Economic Theory, Elsevier, vol. 10(3), pages 269-283, June.
- Lieu, Pang Tien & Mizzi, Philip J. & White, Stephen N., 1992. "Consumer demand with variable preferences in taiwan: an application of the generalized Fechner-Thurstone direct utility function," Journal of Asian Economics, Elsevier, vol. 3(2), pages 281-294.
- Moulton, Brent R & Stewart, Kenneth J, 1999. "An Overview of Experimental U.S. Consumer Price Indexes," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 141-151, April.
- Charles L. Schultze, 2003. "The Consumer Price Index: Conceptual Issues and Practical Suggestions," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 3-22, Winter.
When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:19:y:2008:i:3:p:224-235. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.