Jack E. Triplett

‘Baumol’s Disease’ has been Cured: IT and Multifactor Productivity in US Service Industries

What is the New Economy, what makes it new, and what are the implications for antitrust, regulation and macroeconomic policy? Providing a non-technical and compelling analysis of the modern macro-economy, the contributors to this volume, eminent scholars all, provide their views on the New Economy from a variety of perspectives.

Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes

This handbook reviews the methods employed in price indexes to adjust for quality change: “conventional” quality adjustment methods, which are explained in Chapter II, and hedonic price indexes (Chapter III). Hedonic indexes have a prominent place in price indexes for information and communication technology (ICT) products in several OECD countries, and are also used for measuring prices for some other goods and services, notably housing. The handbook’s objective is to contribute to a better understanding of the merits and shortcomings of conventional and hedonic methods, and to provide an analytic basis for choosing among them.This handbook compares and contrasts the logic and statistical properties of hedonic methods and conventional methods and the results of employing them in different circumstances. In Chapter IV, it reviews empirical evidence on the difference that alternative methods make in practice, and offers an evaluation framework for determining which is better. In ...

Medical care prices and output

We review in considerable detail the conceptual and measurement issues that underlie construction of medical care price indexes in the US, focusing in particular on the medical care consumer price indexes (MCPIs) and medical-related producer price indexes (MPPIs). We outline salient features of the medical care marketplace, including the impacts of insurance, moral hazard, principal-agent relationships, technological progress and organizational changes. Since observed data are unlikely to correspond with efficient outcomes, we discuss implications of the failure of transactions data in this market to reveal reliable marginal valuations, and the consequent need to augment traditional transactions data with information based on cost-effectiveness and outcomes studies.We describe procedures currently used by the US Bureau of Labor Statistics in constructing MCPIs and MPPIs, including recent revisions, and then consider alternative notions of medical care output pricing that involve the price or cost of an episode of treatment, rather than prices of fixed bundles of inputs. We outline features of a proposed new experimental price index -- a medical care expenditure price index -- that is more suitable for evaluation and analyses of medical care cost changes, than are the current MCPIs and MPPIs. We discuss the ways in which medical care transactions enter national economic accounts, including inter-industry flows and national health accounts, as well as aggregate economy implications of possible mismeasurement of prices in the medical sector. We conclude by suggesting future research and measurement issues that are most likely to be fruitful.

SHOULD THE COST-OF-LIVING INDEX PROVIDE THE CONCEPTUAL FRAMEWORK FOR A CONSUMER PRICE INDEX?*

In some countries, the cost-of-living (COL) index serves as the conceptual framework for the CPI, but it has been rejected in others. This paper reviews issues that have arisen in the statistical agency debate and in the economics literature on the COL index, including rhetorical matters which have influenced the debate. I contend that COL theory is useful as a decision-making framework in estimating components of the CPI, and that COL index theory provides appropriate guidance for measuring consumer inflation, contrary to the view that has been adopted for the European HICP and expressed by an advisory committee for the RPI.

Measuring the prices of medical treatments

How serious is medical care inflation in the United States? For many years, price indexes for medical care have outstripped the overall rate of inflation. For example, between 1986 and 1996, the medical care component of the Consumer Price Index (CPI) rose 6.5 percent per year, roughly exceeding the annual increase in the overall CPI during this period by 75 percent. Many economists, however, believe that economic statistics on medical care do not accurately measure medical care price changes because it is especially difficult to construct accurate price indexes for medical markets. Some very recent research, reported in this volume, suggests that --contrary to the usual presumption of runaway medical inflation --prices for at least some medical care interventions are not rising rapidly and may even be falling. Understanding medical care inflation is important for policy issues such as medical care cost containment. Medical care price indexes also affect other economic statistics on medical care, including national accounts and the national health accounts. Understanding economic trends in the medical care sector is vitally dependent on accurate medical care price measures. This volume, the result of a conference cosponsored by the Brookings Institution and the American Enterprise Institute, brings together state-of-the-art methodological and empirical work on the measurement of medical outcomes and prices. It will be a useful tool for anyone concerned about medical inflation, medical outcomes, the quality of medical treatments, and public policy toward medical cost containment.

Measuring technological change with characteristics-space techniques

Abstract The economic model of production and production cost is extended to encompass heterogeneous outputs. The normal goods model shows how input usage varies as the rate of output changes. The extended model concerns output per unit of output —the way costs change as more outputs (the characteristics of goods) are packaged per unit of goods. The extended characteristics-space production model is used to integrate a variety of engineering approaches to measuring technological change. All are shown to provide information about pieces of the production or cost surfaces for heterogeneous goods. The model is also applied to uses of hedonic functions for measuring technological change, and some of the theoretical and interpretative difficulties of these new approaches to measuring technical change are assessed.