Hedonic Quality Adjustment in the CPI

Overview

The CPI is calculated using prices for a fixed basket of goods and services through time. While the basket is periodically revised to reflect changing consumer expenditures, some items being priced in the sample come and go from the marketplace, making collection of these prices from month to month difficult. When an item is no longer available in the marketplace, a similar replacement item is selected. Often there are no similar items from which to choose, and as a result, a less comparable item is selected, potentially introducing quality change and an associated price differential into the index. The hedonic quality adjustment method removes any price differential attributed to a change in quality by adding or subtracting the estimated value of that change from the price of the old item.

More information on hedonic quality adjustment may be found on our page containing responses to frequently asked questions.

CPI Item Categories that Utilize Hedonic Quality Adjustments

Item Relative Importance December 2011
Menís Suits, Sport Coats and Outerwear (PDF) 0.121
Menís Shirts and Sweaters (PDF) 0.214
Menís Pants and Shorts (PDF) 0.147
Boysí Apparel (PDF) 0.172
Womenís Outerwear (PDF) 0.094
Women's Dresses (PDF) 0.154
Women's Suits and Separates (PDF) 0.564
Girls' Apparel (PDF) 0.256
Menís Footwear (PDF) 0.205
Boys' and Girls' Footwear (PDF) 0.149
Womenís Footwear (PDF) 0.310
Educational Books and Supplies (PDF) 0.197
Major Appliances (PDF) 0.158
Televisions (PDF) 0.175
Other Video Equipment (PDF) 0.028

 

Publications, Research and Other Documentation

  • BLS Hedonic Research (PDF)
  • BLS Handbook of Methods, Chapter 17, The Consumer Price Index, Pages 22-23 (HTML) (PDF)
  • Non-BLS Hedonic Research (PDF)

 

Last Modified Date: February 23, 2012