index number

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Index number

A way to standardize the price changes of goods that have much different prices. For example, a consumer price index might be represented by a shopping cart of goods. Suppose those goods cost $324. The index would begin by dividing by 3.24 and the initial value would be 100. One usually watches the percentage increases or decreases in the index. See: Consumer Price Index (CPI), Time series models
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Base Value

An often arbitrary figure used as the initial value of an index. All future values of the index are comparisons against the base value. For example, suppose an index is formed in 2001 and its base value is 100. If the index is 150 in 2009, it means that its value is 50% higher in 2009 than it was in 2001. It is also called the index number. See also: Base Year.
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index number

a single numerical value that reflects the relative size of a VARIABLE in the period under review compared with its size in some predetermined BASE YEAR. For example, a RETAIL PRICE INDEX takes the same sample of goods and services in each period and measures the average price of this typical basket of goods and services, showing this average price in the form of a single index number.

The base period of an index is, by convention, given an index number of 100. For the UK Retail Price Index, this period is (currently) 1987, and subsequent percentage changes commence from that year. In 2004 the Retail Price Index was 187, suggesting that retail prices have increased by 87% on average between 1987 and 2004.

Regardless of whether the index is in terms of price, volume or value, the principle of index numbers remains the same: to exhibit simply and concisely the measured change in a variable from one period to another. See PRICE INDEX, INDEXATION, INDEX-LINKED.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
Unlike the growth accounting approach, the index number method is not restricted to using the aggregate production function.
The recent interest of researchers in the stochastic approach to index number theory is led by Balk (1980), Clements and Izan (1981, 1987), Bryan and Cecchetti (1993) and Selvanathan and Rao (1994).
The ministry of Education will get rid of index numbers and assign learners unique registration numbers in the 2019 KCPE/SE exams.
Diewert (1976) and Barnett (1980) have established that, in this model, the aggregator function at the optimal quantities, [Mathematical Expression Omitted], may be approximated by a statistical index number. The monetary services indexes presented in this issue of the Review are superlative statistical index numbers, as defined by Diewert (1976).(5)
Managing a hospital on the basis of a single index number, the Hospital Performance Index, which is calculated annually, and on data that are more than two years old is one of the most challenging hurdles facing Alberta hospitals today.
Mazel also noted a fee could deter less affluent owners from filing a protest just as the index number fee often deters them from continuing with a meritorious case.
A researcher who uses the appropriate superlative index number formula will obtain exactly the same index value from observable data on prices and on the composition of the market basket in the time periods being compared as a researcher who knows the true values of the coefficients in the cost-of-living function.
Cost-of-living index number theory proceeds from the proposition that a consumption price index should measure the change in the cost of maintaining a fixed, or constant, standard of living.
"So far, index 271, which is our last index number has scored a B plain.
New orders continued to grow rapidly with an index number of 60, only marginally slower than the 60.5 recorded in April.
He is believed to be wearing a short brown leather jacket, blue jeans, navy sweatshirt, dark brown suede boots and driving a red Honda Civic car with index number G816 JNY.
The extent to which violations of this assumption weaken our results is discussed in the final section of this article, titled "Limitations and Extensions of Aggregation and Statistical Index Number Theory."