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The problem of quality change in historical price statistics: An illustrative example using Baedeker travel guides

Author

Listed:
  • Coulter, Jarod
  • Strackman, Braden
  • Wynne, Mark A.

Abstract

This paper uses a novel dataset on the prices of travel guidebooks published between 1832 and 1944 to construct a hedonic price index for books. We show that the failure to adjust for improvements in the quality of the books over time imparts a substantial upward bias to measured inflation by as much as 1.1–1.7 percentage points a year.

Suggested Citation

  • Coulter, Jarod & Strackman, Braden & Wynne, Mark A., 2025. "The problem of quality change in historical price statistics: An illustrative example using Baedeker travel guides," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525005221
    DOI: 10.1016/j.econlet.2025.112685
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    References listed on IDEAS

    as
    1. Aizcorbe, Ana M., 2014. "A Practical Guide to Price Index and Hedonic Techniques," OUP Catalogue, Oxford University Press, number 9780198702429.
    2. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    3. John S. Greenlees & Robert McClelland, 2011. "Does Quality Adjustment Matter for Technologically Stable Products? An Application to the CPI for Food," American Economic Review, American Economic Association, vol. 101(3), pages 200-205, May.
    4. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2018. "How Fast are Semiconductor Prices Falling?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 679-702, September.
    5. Ana Aizcorbe, 2006. "Why Did Semiconductor Price Indexes Fall So Fast in the 1990s? A Decomposition," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 485-496, July.
    6. Tim Erickson & Ariel Pakes, 2011. "An Experimental Component Index for the CPI: From Annual Computer Data to Monthly Data on Other Goods," American Economic Review, American Economic Association, vol. 101(5), pages 1707-1738, August.
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    Keywords

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    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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