These two are not truly comparable, so we might compute a quality adjusted hedonic price estimate for adding the value of a vest to the value of the old two-piece suit to retain comparability (cf. There is usually little by way of data on. The idea is for the commodity analyst to be able to estimate the specific characteristics of an item that give it its value and then assess the value of those characteristics to allow the CPI to remain comparable to prior years over time.Īn example given in the aforementioned Book of Methods suggests the case that a two-piece suit formerly included in the CPI basket of goods may be discontinued in favor of a three-piece suit. The quality-adjusted price index is taken from the coefficients on the time dummies in the hedonic regression. More generally, hedonic regression is used to incorporate replacement items that will be used in place of something that was formerly used in CPI estimation, but has been discontinued, is replaced, or has substantively changed. Specific trip itinerary and fare class for the selected airline
Price Indexes to eliminate the effect of products quality changes. Total number of nonbusiness passengers per airline, per trip itinerary, per fare class The Bank of Japan applies the hedonic quality adjust method in the compilation of the. Per Appendix 8 of the BLS Handbook of Methods, item TG011 (Airline fares) is generated using four sample criteria:Ī Department of Transportation data file consisting of a 10% sample of all passenger itineraries originating in the USĪll airlines providing service from any CPI sample area
With respect to your specific example of airlines, the answer is that passenger totals do influence the CPI sample for airline fares.
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