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Comments on Diewert (2026): On the Theory and Practice of Proper Indexes

Author

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  • C.J. O’Donnell

    (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)

Abstract

This paper comments on Diewert’s discussion of proper quantity indexes. Sev-eral aspects of the theory and interpretation of these indexes are clarified, including the role of production-theoretic assumptions in generating quantity and price in-dexes that satisfy product rules, the interpretation of alternative proper index con-structions, and the ability of proper indexes to preserve historical quantity compar-isons when the representation or scope of a dataset changes. A robustness measure based on quantity data alone is proposed for assessing the sensitivity of quantity comparisons to the choice of proper index. The paper shows that Diewert’s SPQ index does not satisfy the weak monotonicity axiom and therefore is not proper in the sense defined by O’Donnell (2016).

Suggested Citation

  • C.J. O’Donnell, 2026. "Comments on Diewert (2026): On the Theory and Practice of Proper Indexes," CEPA Working Papers Series WP022026, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:199
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    File URL: https://economics.uq.edu.au/files/54638/WP022026.pdf
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    Keywords

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    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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