How relevant are the United Kingdom's official measures of price change?

Issue title: Official Statistics and Ethics

Article type: Research Article

Authors: Ward, Michael | Blades, Derek | Carson, Carol

Note: [] Corresponding author: 35bis rue Brancas, 92310 Sèvres, France. Tel.: +33 145348551; E-mail: derekblades@wanadoo.fr

Abstract: This paper argues that the official price indices currently available for the United Kingdom are misleading the general public and are of doubtful relevance for policy purposes. This is not an ethical issue in the sense that government statisticians or politicians are deliberately misleading the British public about inflation. What has happened is that the statisticians have given more weight to questionable economic theory than to the public's need for a clear and transparent measure of price inflation. The end result is that politicians may make bad decisions because they are using bad statistics and the general public loses faith in the statisticians because of the gap that they see between their own daily shopping experience and the official measure of inflation.

Keywords: Retail price index, cost of living index, hedonic quality adjustments, substitution effect

DOI: 10.3233/SJI-2011-0716

Journal: Statistical Journal of the IAOS, vol. 27, no. 1-2, pp. 31-37, 2011