Re: st: Selecting a sample to compromise between significant size and geographical dispersion

[Maarten Buis <maartenlbuis@gmail.com>]

If the people who use that index attach equal weight to all these
markets, than that volatility is exactly right. When that is not the
case than you need to decide what weight to attach to each market. To
a large extend this is still a matter of theory; you need to decide
what you want your price level to measure. I suspect that this will
involve for you to exactly define the "typical user" of your index. A
silly example would be that if you wanted to develop your price index
for vegetarians, you might want to exclude the price of meat... The
point is that the criterion is not the volatility of the index but
that there a substantive argument underlying why some markets were
excluded or received more or less weight.

Hope this helps,
Maarten

On Thu, Sep 15, 2011 at 10:42 AM, Partho Sarkar
<partho.ss+lists@gmail.com> wrote:
> To clarify further, this is not really a case of defining a population
> by the size of units.  What I am trying to do is to get a country
> level price-index as an alternative to the official index (which is
> also obtained from a sample of markets across the country, selected
> with similar considerations).  The only reason to impose a cut-off is
> that I have found (as one might expect)  that including EVERY market
> reporting a price at every date results in an index which is much more
> volatile compared to the official index.
>
> Partho
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-- 
--------------------------
Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen
Germany


http://www.maartenbuis.nl
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