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Politics : Ask Michael Burke

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To: LowtherAcademy who wrote (83633)	9/18/2000 4:53:36 PM
From: Dennis O'Bell	of 132070

How one supposedly "quantifies" this is beyond me william-king.www.drexel.edu ----- This sort of index is known as a "hedonic" index. The term comes from the same root as "hedonism," the philosophy that holds that the pursuit of pleasure is the highest good. The index is an attempt to measure the "pleasure" that the person gets from buying the good. This approach has other applications to markets for goods that vary in quality. For example, a hedonic index has been used to find out whether American consumers prefer imported cars from particular countries, after allowing for observable differences in quality. (The finding was that, in the 1970's at least, they did prefer imported cars from some particular countries). The hedonic approach is also used in measuring inflation. For example, we pay more for cars now than in the 1950's. How much of that reflects higher prices, and how much -- if any -- reflects improvement in the quality of the cars? Without a "hedonic" index, to allow for changes in quality, we would be unable to answer that question. -----

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