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Quality Adjustment and Hedonics: A Unified Approach

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  • Diewert, Erwin

Abstract

The paper takes a consumer demand perspective to the problem of adjusting product prices for quality change. The various approaches to the problem of quality adjustment can be seen as special cases of the general framework. The special cases include the use of inflation adjusted carry forward and carry backward prices, the use of hedonic regressions and the estimation of Hicksian reservation prices.

Suggested Citation

  • Diewert, Erwin, 2019. "Quality Adjustment and Hedonics: A Unified Approach," Microeconomics.ca working papers erwin_diewert-2019-2, Vancouver School of Economics, revised 14 Mar 2019.
    • Handle: RePEc:ubc:pmicro:erwin_diewert-2019-2
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    File URL: https://econ2017.sites.olt.ubc.ca/files/2019/03/pdf_paper_diewer_DP19-01_QualityAdjustmentandHedonicsMarch142019.pdf
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    References listed on IDEAS

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    Cited by:

    1. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "The System of National Accounts and Alternative Approaches to the Construction of Commercial Property Price Indexes," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 181-219, Springer.
    2. Gabriel Ehrlich & John Haltiwanger & Ron Jarmin & David Johnson & Ed Olivares & Luke Pardue & Matthew D. Shapiro & Laura Yi Zhao, 2023. "Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices," Working Papers 23-26, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Quality adjustment; hedonic regressions; reservation prices; consumer theory; time product dummy regressions; scanner data;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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