Hedonic methods

When calculating price indices, central importance is attached to how quality changes to observed goods can be taken into account. The objective of official price statistics is to measure what we call “pure” price changes, i.e. price movements purged of the adulterating influence of quality change. Hedonic methods, as they are known, are special techniques for quality adjustment that have recently been incorporated into German official price statistics. They particularly lend themselves to technological goods which are subject to rapid progress and cannot be observed over a long period with the quality remaining unchanged. For hedonic quality adjustment, a good is conceptually broken down into quality features and then the influence of these features on the price is determined using regression analysis. In this way, those price changes that result only from qualitative changes to certain features can be mathematically separated from pure price changes and eliminated.

With regard to hedonic price measurement, the following extensive contributions are available for download:

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