The Price Index and Its Extension: A Chapter in Economic Measurement

The Price Index and Its Extension: A Chapter in Economic Measurement

The Price Index and Its Extension: A Chapter in Economic Measurement

The Price Index and Its Extension: A Chapter in Economic Measurement

Excerpt

Sydney Afriat is the guru of the price index. As a young mathematician, he arrived at Richard Stone's Department of Applied Economics in Cambridge in the early 1950s, then the great center of research on theoretical and applied consumer behavior. He soon realized that neither he nor anyone else knew very much about what was meant by “the price index”, in spite of being part of the everyday discourse of economics. In the half century since then, he has been exploring the foundations of the topic. Over the years, he has produced beautiful theorems on the topic, many of them completely unexpected even by the cognoscenti of the topic. And where he has led, the profession has followed, often many years later. Along the way, his work has fathered important incidental areas in economics, perhaps most notably the non-parametric analysis of demand.

Afriat is one of those rare and rarely gifted individuals who think differently from everyone else. What is obvious to him can sometimes seem bizarre to others, especially at first, and his vision of “the price index” often differs sharply from those that dominate the profession. Yet his work is a classic illustration of how much we learn from new ways of thinking, and how the bizarre and unfamiliar conceptions and results of an idiosyncratic leader can become the orthodoxy of the next generation.

This book presents a coherent discussion of fifty years of astonishingly creative work on the price index. Some of the analysis has appeared before, but much has not. Afriat's many friends will welcome this definitive account, as will those who have not previously had the opportunity to understand and enjoy the work.

Angus Deaton
Dwight D. Eisenhower Professor of International Affairs
Professor of Economics
Princeton University, USA

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