tag:blogger.com,1999:blog-7429207.post111575017110909881..comments2023-09-29T04:04:27.405-04:00Comments on marginal utility annex: HedonicsRob Horninghttp://www.blogger.com/profile/11159343725040502005noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7429207.post-1115762005919426672005-05-10T17:53:00.000-04:002005-05-10T17:53:00.000-04:00Suggested (moderately technical) reading on the ra...Suggested (moderately technical) reading on the rationale for hedonics: Ariel Pakes, "A Reconsideration of Hedonic Price Indexes with an Application to PC's" (<I>American Economic Review</I> Vol. 93 No. 5: 1578-1596).<BR/><BR/>Regarding your computer example, it may be worth noting that hedonic adjustment doesn't imply that a computer that's twice as good but the same nominal price as a predecessor has a hedonic price half that of the earlier model. The factor of proportionality in the hedonic analysis depends on the derived demands for the qualities of the goods in question.<BR/><BR/>It's possible to make a case that the hedonically-adjusted CPI actually understates computer deflation, which I sketched <A HREF="http://atbozzo.blogspot.com/2004/12/island-of-lost-posts-iii-computer.html" REL="nofollow">here</A>.Tom Bozzohttps://www.blogger.com/profile/05853926747746938925noreply@blogger.com