Research ArticleOpen AccessGoogle Scholar indexed
Democratic, Plutocratic and Social Weights in Price Indexes
Department of Economics, Centre for Research in Economics and Public Finance (CEFIP), University Roma Tre, Rome, Italy
- 1 Department of Economics, Centre for Research in Economics and Public Finance (CEFIP), University Roma Tre, Rome, Italy
Theoretical Economics Letters·Volume 02 (2012)·Pages 450–454·Published 19 December 2012·DOI10.4236/tel.2012.25084
Copy link · social · email
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.
KeywordsPrice IndexDistributional CharacteristicSocial WeightInflation
- E. Ahmad and N. Stern, “The Theory of Reform and Indian Indirect Taxes,” Journal of Public Economics, Vol. 25, No. 3, 1984, pp. 259-298. 10.1016/0047-2727(84)90057-4
- M. S. Feldstein, “Distributional Equity and the Optimal Structure of Public Prices,” American Economic Review, Vol. 62, No. 1, 1972, pp. 32-36.
- F. Navajas and A. Porto, “Budget Shares, Distributional Characteristics and the Direction of Tax Reform,” Economics Letters, Vol. 45, No. 4, 1994, pp. 475-479. 10.1016/0165-1765(94)90090-6
- M. Kokoski, “Alternative Consumer Price Index Aggregations: Plutocratic and Democratic Approaches,” Office of Price and Living Conditions, Working Paper 370, 2003.
- E. Ley, “On Plutocratic and Democratic CPIs,” Economics Bulletin, Vol. 4, No. 3, 2002, pp. 1-5.
- E. Ley, “Whose Inflation? A Characterization of the CPI Plutocratic Gap,” Oxford Economic Papers, Vol. 57, No. 4, 2005, pp. 634-646. 10.1093/oep/gpi040