The Expanding Role of Hedonic
Methods in the Official Statistics of the United States, by Brent
Presented at the November 30, 2001 meeting of the BEA Advisory Committee
The method of using regressions of prices on characteristics to adjust
for quality changes has grown dramatically in the United States statistical
agencies in recent years. For example, currently 18 percent of the final
expenditures in gross domestic product is deflated using price indexes
that use hedonic methods. These indexes are produced by at least four
statistical agencies (the Bureau of Labor Statistics, the Bureau of the
Census, the Federal Reserve Board, and the Bureau of Economic Analysis).
This paper details the adoption of hedonic methods by each of these agencies
and discusses some misconceptions about the role of hedonic methods in
estimation of price indexes.
May 07, 2002