IDEAS home Printed from https://ideas.repec.org/p/ess/wpaper/id12106.html
   My bibliography  Save this paper

The Plutocratic Bias in the Indian CPI

Author

Listed:
  • Dilip M. Nachane
  • Aditi Chaubal

Abstract

The Laspeyres-type consumer price index (CPI) is traditionally used to measure the changes in cost-of-living over time. Studies indicate this CPI suffers from a plutocratic bias, attaching greater weightage to expenditure by rich compared to poor; while democratic CPI uses equal weights. The paper calculates the plutocratic bias for the new Indian CPI (launched in 2012), rural and urban CPI, and CPI of three Indian states from 2012-2015. It develops democratic CPI indexes for commodity groups: necessities, luxuries, housing and others; and separate indexes for three consumption brackets. The analysis has important implications for monetary policy and indexation of transfer payments.

Suggested Citation

  • Dilip M. Nachane & Aditi Chaubal, 2017. "The Plutocratic Bias in the Indian CPI," Working Papers id:12106, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12106
    Note: Institutional Papers
    as

    Download full text from publisher

    File URL: http://www.esocialsciences.org/Download/repecDownload.aspx?fname=A2017918155838_29.pdf&fcategory=Articles&AId=12106&fref=repec
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Paul Armknecht & Mick Silver, 2014. "Post-Laspeyres: The Case for a New Formula for Compiling Consumer Price Indexes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(2), pages 225-244, June.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    4. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    5. Angus Deaton, 1998. "Getting Prices Right: What Should Be Done?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 37-46, Winter.
    6. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:4:y:2002:i:3:p:1-5 is not listed on IDEAS
    2. Angela Daley & Thesia I. Garner & Shelley Phipps & Eva Sierminska, 2020. "Differences across Place and Time in Household Expenditure Patterns: Implications for the Estimation of Equivalence Scales," Economic Working Papers 520, Bureau of Labor Statistics.
    3. Redding, Stephen J. & Weinstein, David E., 2016. "A unified approach to estimating demand and welfare," LSE Research Online Documents on Economics 67681, London School of Economics and Political Science, LSE Library.
    4. M. Fase, 2007. "Notes and Communications," De Economist, Springer, vol. 155(2), pages 221-238, June.
    5. Ramsès H. Abul Naga & Enrico Bolzani, 2006. "Poverty and Permanent Income: A Methodology for Cross-Section Data," Annals of Economics and Statistics, GENES, issue 81, pages 195-223.
    6. Eduardo Ley, 2002. "On Plutocratic and Democratic CPIs," Economics Bulletin, AccessEcon, vol. 4(3), pages 1-5.
    7. Lieu, Pang-Tien & Liang, Jung-Hui & Chen, Jui-Hui, 2008. "Consumer preferences and cost of living in Taiwan," Journal of Asian Economics, Elsevier, vol. 19(3), pages 224-235, June.
    8. Vincent Geloso & Vadim Kufenko & Klaus Prettner, 2016. "Demographic change and regional convergence in Canada," Economics Bulletin, AccessEcon, vol. 36(4), pages 1904-1910.
    9. Angela Daley & Thesia Garner & Shelley Phipps & Eva Sierminska, 2020. "Differences across countries and time in household expenditure patterns: implications for the estimation of equivalence scales," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 734-757, November.
    10. Stephen J Redding & David E Weinstein, 2020. "Measuring Aggregate Price Indices with Taste Shocks: Theory and Evidence for CES Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 503-560.
    11. 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.
    12. repec:phd:pjdevt:jpd_1992_vol__xix_no__1-c is not listed on IDEAS
    13. Karina Doorley & Luke Duggan & Theano Kakoulidou & Barra Roantree, 2024. "Equivalisation (once again)," Trinity Economics Papers tep0124, Trinity College Dublin, Department of Economics.
    14. 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.
    15. Morne Oosthuizen, 2007. "Consumer Price Inflation across the Income Distribution in South Africa," Working Papers 07129, University of Cape Town, Development Policy Research Unit.
    16. Christian Dudel & Jan Marvin Garbuszus & Julian Schmied, 2021. "Assessing differences in household needs: a comparison of approaches for the estimation of equivalence scales using German expenditure data," Empirical Economics, Springer, vol. 60(4), pages 1629-1659, April.
    17. Jan Klavus, 1999. "Health care and economic well‐being: estimating equivalence scales for public health care utilization," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 613-625, November.
    18. Constantin Bürgi, 2020. "Consumer Inflation Expectations and Household Weights," Working Papers 2020-002, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    19. Echeverría, Lucía, 2022. "Sensibilidad del análisis de la pobreza a las escalas de equivalencias. Una aplicación para Argentina," Nülan. Deposited Documents 3789, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    20. Echeverría, Lucía, 2020. "Modelos colectivos de consumo y distribución intra-hogar. Teoría y aplicaciones," Nülan. Deposited Documents 3832, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    21. Segal, Paul, 2020. "Inequality as entitlements over labour," LSE Research Online Documents on Economics 104083, London School of Economics and Political Science, LSE Library.
    22. Ravallion, Martin, 2015. "On testing the scale sensitivity of poverty measures," Economics Letters, Elsevier, vol. 137(C), pages 88-90.

    More about this item

    Keywords

    Laspeyres index numbers; plutocratic bias; democratic CPI; expenditure elasticity; consumption brackets; consumer price index (CPI); plutocratic bias; CPI indexes; commodity groups; housing; monetary policy; indexation; transfer payments; India.;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ess:wpaper:id:12106. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Padma Prakash (email available below). General contact details of provider: http://www.esocialsciences.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.