Quantifying Quality Growth
AbstractUsing U.S. Consumer Expenditure Surveys, we estimate "quality Engel curves" for 66 durable goods based on the extent richer households pay more for each good. The same data show that the average price paid rises faster from 1980 to 1996 for goods with steeper quality Engel curves, as if households are ascending these curves. BLS prices likewise increase more quickly for goods with steeper quality Engel curves, suggesting the BLS does not fully net out the impact of quality upgrading. We estimate that annual quality growth averages 3.7 percent for our goods, with 2.2 percent showing up as higher inflation.
CitationBils, Mark, and Peter J. Klenow. 2001. "Quantifying Quality Growth." American Economic Review, 91 (4): 1006-1030. DOI: 10.1257/aer.91.4.1006
- D12 Consumer Economics: Empirical Analysis
- L62 Automobiles; Other Transportation Equipment
- L63 Microelectronics; Computers; Communications Equipment
- L68 Appliances; Other Consumer Durables
- E31 Price Level; Inflation; Deflation