The Generalized Unit Value Index Family

Authors


  • Note: I wish to thank two anonymous reviewers for their valuable suggestions. The helpful comments that I received from Bert Balk, Erwin Diewert, Marcel Greuel, Jan de Haan, Ulrich Kohli, and Marshall Reinsdorf are greatly appreciated. John Brennan's generous advice greatly improved the readability of this paper. All of them have guided me toward a better understanding of the subject; however, any remaining errors and omissions are of course mine. I wish to thank Brian Bloch for his comprehensive editing of the manuscript. Excellent research assistance was provided by Kerstin Weber.

Abstract

This study introduces a group of Generalized Unit Value indices that evaluate price level changes. The approach is to transform the original price and quantity data into numbers that all relate to a common unit which provides the same intrinsic worth to the consumers. When, in the transformed data, an equivalence of worth is present, then even incommensurables can be aggregated by the standard unit value method. The group of Generalized Unit Value indices includes some well-known (Laspeyres, Paasche, Banerjee), barely known (Lehr, Davies), and previously quite unknown price indices. Using a Generalized Unit Value price index as a deflator yields a particularly appealing and useful quantity index.

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