Affiliations: Bureau of Labor Statistics, 2 Massachusetts Avenue, NE Suite 3130, Washington D.C. 20212, USA. E-mail: [email protected]
Note: [1] This is a revised version of the paper presented at the Joint ECE/ILO Meeting on Consumer Price Indices (Geneva, 3–5 November 1999). The views expressed in this paper are solely those of the author and do not necessarily reflect the policies of the Bureau of Labor Statistics.
Note: [2] I would like to thank Paul Armknecht, Dennis Fixler, Tod Reese, Ken Stewart, Kim Zieschang, and the participants in the Meeting for helpful discussions, comments, and assistance. All responsibility for errors remains with me.
Abstract: This paper describes the major methods used by statistical agencies to adjust for differences in the quality of a good or service when one item replaces another in a sample used to construct a Consumer Price Index. The methods are categorized as either direct, including the production-cost and hedonic approaches, or indirect, such as linking or class-mean imputation. The paper also presents simplified example calculations showing how the methods are applied in practice.
