Henri Theil's Contribution in the Area of Index Numbers

Article excerpt

I met Professor Henri Theil when he was visiting Professor Ken Clements at the University of Western Australia in 1983. I was inspired by the papers presented by Professors Theil and Clements on consumer demand at a conference held during that period. At the end of the conference, the meeting I had with Theil and Clements led me to work on my Ph.D., "Explorations on Consumer Demand," under the guidance of Ken Clements. From time to time, Henri Theil made valuable suggestions and comments on my work, and he also acted as an examiner for my thesis.

Henri Theil's contribution to index numbers started very early with his work on best linear index numbers (Theil 1960). His papers in the mid-1960s, Theil (1965, 1967) and Kloek and Theil (1965), introduced the well-known Theil-Tornqvist index that was used for intercountry comparisons and applied in his later papers (Theil 1968, 1973, 1974). Henri Theil continued to apply the index number theory in the 1970s to his work on consumer demand, especially in the area of cross-country consumption patterns (Theil 1975/1976, 1981).

Henri Theil's work has inspired a number of researchers to work on the construction of index numbers. In general, his approach is simple and elegant, which accounts for the widespread adoption of his work. In particular, his formulation of the index has led myself and others to revisit the stochastic approach to index numbers. Following the work of Clements and Izan, binary as well as multilateral comparisons of prices were developed (Selvanathan and Prasada Rao 1984), providing an extensive survey of various applications and extensions of the stochastic approach. In a paper (Prasada Rao, Doran, and Selvanathan 2002), we explore the possibility of estimating commodity-specific effects along with the overall price index that coincides with the Theil-Tornqvist index.


Journal of Agricultural and Applied Economics, Supplement, 35(2003):65-66 (C) 2003 Southern Agricultural Economics Association



Clements, K. …