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Democratic, Plutocratic and Social Weights in Price Indexes

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  • Liberati, Paolo

Abstract

This paper introduces social considerations into the calculation of the price index. To this purpose, recourse is made to the concept of distributional characteristic. It is shown how an aggregate price index can be expressed as a weighted average of commodity-specific prices, with weights that depend on both the aggregate share of consumption and the way in which consumption is distributed across households. The proposed index provides a complementary basis for the analysis of the impact of inflation and for the calculation of its social value.

Suggested Citation

  • Liberati, Paolo, 2012. "Democratic, Plutocratic and Social Weights in Price Indexes," MPRA Paper 43978, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43978
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    File URL: https://mpra.ub.uni-muenchen.de/43978/1/MPRA_paper_43978.pdf
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    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. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
    3. Navajas, Fernando & Porto, Alberto, 1994. "Budget shares, distributional characteristics and the direction of tax reform," Economics Letters, Elsevier, vol. 45(4), pages 475-479, August.
    4. Eduardo Ley, 2002. "On Plutocratic and Democratic CPIs," Economics Bulletin, AccessEcon, vol. 4(3), pages 1-5.
    5. Feldstein, Martin S, 1972. "Distributional Equity and the Optimal Structure of Public Prices," American Economic Review, American Economic Association, vol. 62(1), pages 32-36, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    D60; D63; H00;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H00 - Public Economics - - General - - - General

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