Theoretical Analysis And Empirical Research On Hedonic Price Index

To compute price index precisely, it is essential theoretically to ensure the homogeneity of goods so as to make the worked-out price index indicate the only change of price due to the changes of supply and demand—the so called 'pure price change'. It is nature that the change of price induced by quality movement being estimated in the sense of quantity change; therefore, it should not be reflected in the price index. The process of deleting the price change induced by quality change from price index being worked out is called quality adjustment by statistics. Hedonic price index is a new systematic statistic approach aimed at solving this quality adjustment problem. By employing means of mathematical instruments, this approach makes it possible to quantify the levels of quality changes so as to avoid the bias induced by the subjective judgment in measuring the quality changes. In the near decade, hedonic price index approach has been thought as a prospected method to handle quality adjustment problems, and has gained much focus worldwide. The estimation of hedonic price index for different kinds of goods and services have become a general practice for many statistics agencies in developed countries.Based on a systematic study on the underlying theory and methods for hedonic price index estimation, this dissertation attempts to make some contributions in improving the hedonic price index estimation methods, and conduct several empirical researches by employing these methods to compute hedonic price index for some goods in real world. Therefore, the main works of this dissertation are as follow.1. Making a systematic research on Lancaster's 'hedonic consume theory' and Rosen's hedonic price equilibrium model, so as to lay down a theoretic foundation for further research on hedonic price index estimation methods;2. Making detailed discussions on Box-Cox transformation and stepwise regression analytical method. They will be used as the fundamental mathematical instruments for identifying hedonic function form in this research.3. Based on hedonic price index theories, exploring the fundamental statistical implications embodied in the current practical hedonic price index. A general framework for classifying hedonic price index is proposed, and definitions for different hedonic price indexes against the proposed classification framework are given out. This paper also discusses the estimation methods to conduct quality adjustment in computing hedonic price for considered product. And make a comparison between the traditional quality adjustment methods and hedonic quality adjustment.4. Outlines four basic approaches for constructing hedonic price index, and conducts a systematical comparison study on the relationships among the four approaches and the traditional quality adjustment methods. The results of the comparison study can be used as a theoretical background for the following empirical research.5. To test the validation of above proposed hedonic price index methodologies, several empirical researches have been conducted and five hedonic price indexes have been estimated based on the data collected from Chinese college text book price, Chinese automobile price, Moscow (Russia) housing price, US computer price and hard-disk price. The empirical results indicate that the use of the proposed hedonic price index methodologies is much helpful in the practical estimation of Chinese price index.From above works, this dissertation attempts to make contributions both to the theoretic and empirical researches on hedonic price index in the following aspects.1. Centering around hedonic price theories, through a thoroughly reviewing on the current results from both theoretic and empirical researches on hedonic price index, this paper outlines a theoretic framework for so called pure-price-change-based hedonic price index. Based on the discussion of the mathematical and statistic implication of hedonic price function, this paper defines hedonic price index definitely, it is a price index stemmed from the underlying hedonic price function, and it is a concept of economic meaning, not just of statistics meaning. By this interpretation and according to the function form and data structure used in the estimation of hedonic price index, a classification framework for hedonic price index and their corresponding definition are suggested.2. As to the aspects of constructing methods for hedonic price index, based on the comparison of the current methods, this paper classifies them into four varieties, pooling data index, cross section index, hedonic-price-function-based modeling index and hedonic-price-function-based quality adjustment index. According to their comparative characteristics of each kinds of method, different approaches for collecting data source in the process of constructing price index are suggested.3. From the viewpoint of economics and statistics and based on the hedonic price index theory, a concept of standard hedonic goods is defined. Standard hedonic goods is a kind of conceptual goods that consists of the typical characteristics of the heterogeneous goods in consideration when constructing hedonic price index for heterogeneous goods. Therefore, hedonic price index for specific goods is a measurement for measuring the difference necessary to pay for the same quality or characteristics of goods at different time periods. The process of computing hedonic price index can be interpreted as a process of standardizing the price of heterogeneous goods.4. As mentioned above, this paper also makes efforts in empirical researches. The estimated five empirical hedonic price indexes will be of help in improving Chinese price index.