Hedonic regression

As hedonic (Greek ἡ ἡδονή HE Hedone, "pleasure", "joy" ) refers to a valuation method that assesses an object according to its intrinsic ( internal ) and extrinsic ( external ) values. The word derives from the Greek word coming from English hedonic ( " Lust "). The hedonic pricing is sometimes used in economic statistics and real estate.

Description

In the U.S. ( since the 1990s ), the United Kingdom, Australia, New Zealand and Germany (since the euro was introduced in 2002 ), inflation and economic growth are calculated hedonic. This one tries to quantify adopted quality improvement of products. This leads to lower inflation rates and estimated depending on the country and sector up to 30% higher growth figures.

In the U.S., the introduction of hedonic price calculation also by the then head of the U.S. Central Bank Alan Greenspan was demanded. Because about interest rates and money supply, inflation is affected, rather lowered the key interest rates and the money supply can be increased by the Central Bank to lower inflation. The money supply growth oriented addition to inflation and the increased economic growth. In addition, social services are often adjusted by the inflation rate in the United States. Wage policy is based on the inflation rate.

In the hedonic pricing a good mentally (subjectively ) is decomposed into quality properties and then determined using the so-called regression analysis of the influence of these qualities on the price. This allows those price changes that are based only on qualitative changes in certain properties, are calculated separately and eliminated from the pure price changes.

The Federal Statistical Office has always tried to take into account qualitative changes in the determination of changes in the price level. Through hedonic method, however, this is done now systematic. A certain arbitrariness arises from the fact that only a few products in Germany hedonic price measurement. In addition, because there is always a subjective decision as to whether a qualitative improvement exists. Strictly speaking, one would have to take into account quality deterioration, but this is almost never the case. Take, for example in the railway traffic delays to or prepared food with cheaper ingredients, nowhere is this recognized as a quality deterioration of the relevant goods or services in accordance with the inflation rate increasing growth rates and reducing effects. Nor is the parallel to increase performance usually decreasing lifetime of the short-lived nascent consumer products is taken into account in the method.

Example

The processor speed of computers - especially hedonic methods are used - has increased in 2005 due to improved techniques of 2,000 MHz to 3,000 MHz. The annual average CPU prices have remained constant. Here statisticians calculate as follows: Increasing the clock frequency of 2,000 MHz to 3,000 MHz with the processors provides a performance increase of 50 percent dar. This fall the prices of CPUs taking into account the increase in performance over the course of 2005 in the consumer price statistics by a third. In the growth and productivity of this process numbers is reversed. If the processors have become 50 percent faster at the same price during the year, then in determining the value can not be assumed that the real prices, but this value must be corrected according to the performance increase of 50 per cent upwards. Thus, although there were no statistically significant changes during the year, called the consumer price statistics in our example for processors a price decline of one-third (inflation reduction) and growth has made ​​50 percent more than the real numbers.

Similarly, go to the other computer components in the calculation of the total computer price. With new features such as TFT screen instead of CRT monitor is an attempt to quantify the qualitative sharpness of profit. Whether a qualitative progress exists, is always subjective discretion of the statistician.

The hedonic pricing is also used for the calculation of real estate. In this case, the price of the object is determined by its physical properties such as size, condition, standard of development and the environment, especially their recreational value and infrastructure (in particular public transport, schools and shops ).

Demarcation

Although the adjective comes from the term hedonism, the pursuit of sensual pleasure and enjoyment, but in this interpretation hardly anything in common with this. ( By the hedonic pricing speak to the rising pleasure that goes along with quality improvements, are recorded and placed on the measured price increase in deduction. )