Abstract
Usually, also in developing countries, price-induced changes in standard of living are measured by means of Laspeyres price indices. Looking at the special economic situation characterizing least developed countries, the economic validit of such indices is doubtful. The main theoretical results of this paper are derived on the basis of a special utility concept which may be considered typical for least developed countries. It is shown that, under certain conditions, a Laspeyres price index over- or underestimates respectively changes in standard of living. Furthermore, it does not sufficiently evaluate households’ supply positions. These theoretical results are motivated and illustrated by a special least developed country, the Republic of Niger. The paper closes with some further suggestions for measuring changes in standard of living in developing countries.
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The authors want to express their thanks to Directeur M. Adam, Direction de l’Energie, Ministère de Mines et Industrie, to the Direction de la Statstique et des Comptes Nationaux, Ministère du Plan, both Niamey, Republic of Niger, to Dr. G. Lachenmann, GDI, Berlin (West) and to Professor Dr. E. Schaich for their helpful support.
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Brachinger, H.W., Schubert, R. Measuring price-induced changes in standard of living in least developed countries: economic validity of laspeyres price indices and some further suggestions. Statistical Papers 29, 85–112 (1988). https://doi.org/10.1007/BF02924515
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DOI: https://doi.org/10.1007/BF02924515