Democratic, Plutocratic and Social Weights in Price Indexes

Paolo Liberati

Department of Economics, Centre for Research in Economics and Public Finance (CEFIP), University Roma Tre, Rome, Italy.

DOI: 10.4236/tel.[phone]                

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.

Keywords

Price Index; Distributional Characteristic; Social Weight; Inflation

Conflicts of Interest

The authors declare no conflicts of interest.

References

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