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The plutocratic bias in the CPI: Evidence from Spain

Author

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  • Javier Ruiz-Castillo
  • Eduardo Ley
  • Mario Izquierdo

Abstract

We define the plutocratic bias as the difference between inflation measured according to the current official CPI and a democratic index in which all households receive the same weight. We estimate that during the 1990s the plutocratic bias in Spain amounts to 0.055 percent per year. However, positive and negative biases cancel off when averaging over the whole period. The mean absolute bias is significantly larger, 0.090. We can explain most of the oscillations experimented by the plutocratic bias by the price behavior of three goods: a luxury good and two necessities.
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Suggested Citation

  • Javier Ruiz-Castillo & Eduardo Ley & Mario Izquierdo, "undated". "The plutocratic bias in the CPI: Evidence from Spain," Studies on the Spanish Economy 60, FEDEA.
    • Handle: RePEc:fda:fdaeee:60
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    Cited by:

    1. Alessandra Cepparulo & Francesca Gastaldi & Paolo Liberati, 2010. "The distributional and welfare impact of inflation in Italy," Working Papers in Public Economics 134, University of Rome La Sapienza, Department of Economics and Law.
    2. Petr Janský & Pavel Hait, 2016. "Inflation Differentials among Czech Households," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(1), pages 71-84.
    3. Alvaro Montenegro, 2004. "50 anos del índice de precios en Colombia," Documentos de Economía 1904, Universidad Javeriana - Bogotá.
    4. repec:aru:wpaper:201301 is not listed on IDEAS
    5. Ruiz-Castillo, Javier & Ley, Eduardo & Izquierdo, Mario, 2002. "Distributional aspects of the quality change bias in the CPI: evidence from Spain," Economics Letters, Elsevier, vol. 76(1), pages 137-144, June.
    6. Blow, Laura & Crawford, Ian, 2002. "A nonparametric method for valuing new goods," Working Paper Series 0143, European Central Bank.
    7. Eduardo Ley, 2002. "On Plutocratic and Democratic CPIs," Economics Bulletin, AccessEcon, vol. 4(3), pages 1-5.
    8. Carlos Guerrero de Lizardi, 2010. "Alternative Consumer Price Indexes for Mexico," CID Working Papers 42, Center for International Development at Harvard University.
    9. repec:ebl:ecbull:v:4:y:2002:i:3:p:1-5 is not listed on IDEAS

    More about this item

    Keywords

    Consumer price index; cost-of-living index; aggregation; inequality;
    All these keywords.

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