Abstract
In this chapter we will continue the theme of data description (data presentation, using indices). In our last chapter when we discussed skewness we mentioned the difficulty of using two different measures. A similar difficulty may appear in the case of changes in economic, business and social variables over time. Index numbers can solve this problem by providing a simple summary of change by aggregating the information available and making a comparison to a base figure. This base figure could be an arbitrary year or the starting figure. Index numbers are not concerned with absolute values but rather the movement of values, i.e. they allow us to distinguish between nominal and real values. This is another way of summarizing information. Examples of index numbers are the RPI (Retail Price Index), the exchange rate, the poverty line and real income. We can have indexes for prices, quantities, expenditures, etc.
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Notes
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See the urban places consumer price index concepts, methods and sources by SIS for further details.
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Özdemir, D. (2016). Index Numbers. In: Applied Statistics for Economics and Business. Springer, Cham. https://doi.org/10.1007/978-3-319-26497-4_5
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DOI: https://doi.org/10.1007/978-3-319-26497-4_5
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